• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

How should I write off my laptop purchase expense?

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

jmt111

Junior Member
New Jersey

I am en employee of a company and also run a home business on the side. I purchased a laptop that I use for both my employment and my home business. I have not been reimbursed the cost of the laptop. Would it be better to deduct the cost of the laptop from the salary I receive from my employer as a work-related expense or from the profits of my home business? Or is the net effect the same?
 


FlyingRon

Senior Member
The results are certainly not the same and you can't just do one or the other.

First, as an employee, you can't just take work expenses "off your income." Even in prior years, you had to take it as a miscellaneous itemized deduction. In 2018, that deduction is GONE. You buy something for work, you best get them to pay for it, because you can't deduct it.

Second, for your home business, you can only deduct the computer to the extent that it is used for that home business use. If you share it between the two businesses, you need to apportion the part used for the home business. I suspect a laptop is cheap enough (well under $2500) that you can expense it. Otherwise, it would need to be depreciated instead. Note, you don't deduct it from the "profits." The "profits" are what is remaining after you deduct the expense (i.e., what you are taxed on). You deduct it from your gross receipts (on the sched C typically).
 

davew9128

Junior Member
Are you saying that the QBI deduction eliminates business expenses on Schedule C? Please explain.
No I'm saying expensing something as de minimis rather than capitalizing and depreciating/Section 179 expensing removes the asset from QBAI for taxpayers who use that part of the calculation for QBI.
 

jmt111

Junior Member
First, as an employee, you can't just take work expenses "off your income." Even in prior years, you had to take it as a miscellaneous itemized deduction. In 2018, that deduction is GONE. You buy something for work, you best get them to pay for it, because you can't deduct it.
In the past, I believe I was able to deduct unreimbursed employee expenses and tax preparation fees, subject to a “2% limit” based on their total minus 2% of my AGI. Is this no longer a below-the line deduction for individuals who itemize their deductions?
 

davew9128

Junior Member
In the past, I believe I was able to deduct unreimbursed employee expenses and tax preparation fees, subject to a “2% limit” based on their total minus 2% of my AGI. Is this no longer a below-the line deduction for individuals who itemize their deductions?
It was removed from the law until at least 2025.
 

jmt111

Junior Member
Historically, I have calculated my taxable income is calculated by subtracting the following below-the-line (itemized) deductions from my AGI:
  • 1. Property taxes on a main home and any non-business or rental property in the year it was paid (§ 164);
  • 2. Cash and other gifts to charity (§ 170);
  • 3. State and local taxes paid to state and local governments;
  • 4. Trade or business expenses (§ 162) and losses incurred in a trade or business (§ 165);
  • 5. Unreimbursed employee expenses and tax preparation fees, subject to a “2% limit” based on their total minus 2% of AGI.
Has only no. 5 been removed as a below-the-line deduction or have the others been removed as well?
 

LdiJ

Senior Member
Historically, I have calculated my taxable income is calculated by subtracting the following below-the-line (itemized) deductions from my AGI:
  • 1. Property taxes on a main home and any non-business or rental property in the year it was paid (§ 164);
  • 2. Cash and other gifts to charity (§ 170);
  • 3. State and local taxes paid to state and local governments;
  • 4. Trade or business expenses (§ 162) and losses incurred in a trade or business (§ 165);
  • 5. Unreimbursed employee expenses and tax preparation fees, subject to a “2% limit” based on their total minus 2% of AGI.
Has only no. 5 been removed as a below-the-line deduction or have the others been removed as well?
4 and 5 have been removed.
 

LdiJ

Senior Member
I may be wrong here but through discussions with others:

Haven't 1 and 3 been modified by imposing upper limits or some other restrictions.
Yes, 1 and 3 have been modified by imposing a 10k limit on all state, local and property taxes.
 

jmt111

Junior Member
4 and 5 have been removed.
Do you have a source that shows that item 4 (Trade or business expenses (§ 162) and losses incurred in a trade or business (§ 165)) has been removed as a deduction? I cannot find anything online that shows this.
 

LdiJ

Senior Member
Do you have a source that shows that item 4 (Trade or business expenses (§ 162) and losses incurred in a trade or business (§ 165)) has been removed as a deduction? I cannot find anything online that shows this.
Lets make sure that we are talking about the same thing. If you are self employed and file a Schedule C then you can still deduct trade or business expenses. If you are employed and receive a W2 then those expenses were previously deducted on Schedule A as employee business expenses. Employee business expenses were completely removed under the tax law changes.
 

jmt111

Junior Member
How would it work if I am employed and receive wages but I also have a second business that I run as a sole proprietorship and whose profits and losses I report on Schedule C? In this case, do my sole proprietorship expenses offset my sole proprietorship income? If the sole proprietorship experiences a net loss, does that offset the wage that is reported on my W-2?
 

Sponsored Ad

Top