Are you a small business owner looking for ways to save money on your business tax return? One way to reduce the amount of taxes owed is to claim a tax deduction on all electronic devices purchased for your business, such as smartphones, computers, and tablets.
Virtually all electronic devices and technologies are tax deductible, including for contractors and home business owners. The Internal Revenue Service (IRS) allows you to write off any electronic item you may use to manage or conduct your business operations.
Computer Tax Deductions
A self-employed contractor or small business owner can claim a laptop or desktop computer purchase as a tax deduction if more than 50% of the computer use is for business activities. But if the computer is mainly used to watch YouTube videos and play video games on Steam, you cannot claim the computer as a business expense for tax deduction purposes.
Computer accessories usually qualify as tax deductions if you use any of them for your business, such as scanners, printers, fax machines, etc. And if you use any software programs for your business, such as Microsoft Office or Adobe Photoshop, then you can claim those purchases as tax deductions.
Overall, the general rule is that you can claim a tax deduction for any computer or accessory used primarily for your business. In fact, you could even claim an educational software program as a business expense if the program helps train your employees or teaches you something to help you operate your business.
Tablet Tax Deductions
Do you use a tablet device like an Apple iPad to help run your business? If so, you can claim a tablet purchase as a tax deduction, just like a computer. The same rule applies where at least 50% of the tablet usage must be for your business, not personal. So if you bought the tablet to play video games, you could not claim it as a business expense for a tax deduction.
In addition, all the mobile apps you purchase for your tablet can be claimed as a deduction if they are used for business purposes, such as the Microsoft Office document viewer application. You can even claim tablet accessories as business expenses, such as connection cables, external keyboards, and carrying cases.
Smartphone Tax Deductions
Your smartphone is probably one of your greatest business assets because it allows you to communicate constantly with your employees and customers. Whether you use an Android or iPhone, you can claim your smartphone purchase and carrier service fees as business expenses on your business tax return.
Of course, the primary use of the smartphone must be for conducting business activities. The IRS requires that at least 60% of your smartphone usage be for business-related communications to claim it as a business expense. Making business-related phone calls or sending business-related text messages would qualify as business-related communications.
Try not to use your personal smartphone for business purposes because calculating the business usage percentage will get complicated. It is much easier to prove your smartphone is a business expense if you purchase a separate smartphone strictly for your business and nothing else. Otherwise, all the personal calls and text messages on your shared smartphone could raise red flags with the IRS if you claim the smartphone as a business expense.
Contact a Tax Professional for Further Guidance
Don’t try to figure all of this out on your own.
As a small business owner or self-employed contractor, you should contact an accountant or tax advisor to help guide you on which tax deductions you are allowed to take.