When you’re buying a new computer, it’s common to think, “Are there any home computer deductions I can use?”
Costs of buying and operating a home computer can include related equipment, including printers, drives, scanners, modems, etc.
The short answer for home computer tax deductions: It depends on how you use the computer.
Strictly Personal Use
Personal computer use doesn’t enable any tax deduction. This includes when you use the computer for entertainment, education, hobbies, and other personal purposes.
Home Computer Deductions for Home Office Business Use
If you use the computer in an office at your home that qualifies as your “regular business establishment,” you can generally deduct depreciation and other computer-related expenses.
Home Computer Deductions for Use in Business Education
You can deduct home computer operating expenses plus depreciation as part of deductible education related to your trade or business as a self-employed taxpayer.
This education is defined as the courses you take to maintain or improve your business skills. You may, for instance, use the computer to prepare assignments or take online courses.
However, study to meet minimum educational requirements or that qualifies you for a new trade or business doesn’t count.
Of course, to be assured of any deduction you must provide acceptable, detailed proof of use, etc.
Employee, Production-of-Income Expense Deductions Suspended for 2018-2025
Under the Tax Cuts and Jobs Act (i.e., TCJA; PL 115-97, 12/22/2017), unreimbursed expenses of employees (including computer expenses) and expenses paid or incurred for the production of income aren’t allowed for 2018-2025.
For tax years after 2025, you’ll be able to:
- Take an expense deduction, deduct accelerated depreciation over 5 tax years and the operation expenses if the computer is required or used for your employer.
- Deduct operating expenses plus depreciation for the use of the computer as part of deductible business education.
- Deduct operating expenses plus depreciation if you use your computer to produce or collect income even if the income-producing activity doesn’t qualify as a trade or business (i.e. track investments); to manage or maintain property held for producing income; or to determine, contest, pay, or claim a refund of any tax.
If you have questions, reach out to us at 314-961-1600 or contact us to discuss your situation.
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Alan Dierker is a Tax Manager with experience in tax, outsourced controller services, including fulfilling compilation and preparation agreements, payroll and compliance issues. He also has experience in the following industries: Wholesale Distribution, Private Foundations, Not-for-Profit and Real Estate.
About Smith Patrick CPAs
Smith Patrick CPAs is a boutique, St. Louis-based, CPA firm dedicated to providing personal guidance on taxes, investment advice and financial service to forward-thinking businesses and financially active individuals. For over 30 years, our firm has focused on providing excellent service to business owners and high-net worth families across the country. Investment Advisory Services are offered through Wealth Management, LLC, a Registered Investment Advisor.