How do you write off something on your taxes?

Question

In a few months I plan on buying a laptop for my job. The one I want will cost about $2500 dollars and I want to write it off around this time next year. How do you do this? Do you get all the money back or a percentage?

Answer 1

In order to write something like that off, you have to itemize using Schedule A. You don't really get any "money back" or a percentage, but your overall tax is lowered. This is how it works: when you do your taxes you have a choice, you can take your standard deduction -- a set amount based on your filing status -- or you can itemize. When you take your standard deduction, that amount (for 2006, the amount is $5,150 for "single" filing status) is subtracted from your income before your tax is calculated. The same is true for your itemized deductions: the total amount of itemizeable deductions is subtracted from your income before your tax is calculated. So, whichever option benefits you most is the one you should take. If all you have to itemize is the new laptop, chances are you will be better off taking your standard deduction. However, if you have other itemizeable expenses (such as mortgage interest, property tax, charitable contributions, etc.), you would deduct the laptop as an unreimbursed employee expense....provided you are an employee. One caveat, however: you cannot even begin to deduct unreimbursed employee expenses until the amount of those expenses exceeds 2% of your AGI. So if your AGI is 18,000, you would only be able to deduct expenses over and above $360. You would also have to determine what percent of the laptop is for work use and what percent is for personal use and deduct only that portion that is for work use. Make sense? I know it's confusing, that's why most people go to a tax preparer. Anyway, hope that helped make things a little clearer.

Answer 2

All of these answers are correct. If you aren't self employed, then you will most likely get a small (if any) deduction on the laptop. Also, if you are self employed, it depends upon what kind of company that you have. In most cases, the laptop purchase should have been a company expense and not your own. However, you can have your company reimburse you (write yourself a check from your company's account) for the laptop and then it will get deducted from your company's taxes as an expense. If you are a sole proprietor, then there are methods to itemize the laptop as a deduction, but you need to research that deduction type as I am not familiar with SP's.

However, you can save some money this year on your personal tax expenses as well. I found a site that paid me back all of my H&R Block tax expenses this year. I went to their site, provided below in the resource box, and filled out my information. I was able to get all of my tax expenses reimbursed to me, and could have even had some of my taxes paid for me if I had owed the IRS. Go and fill out your information to see how much they can save you today.

Answer 3

Unreimbursed employee business expenses are deductible on Form 2106 and Schedule A if you itemize deductions.

Assets like a computer must be depreciated and you may only depreciate the portion that is actually used for business. You may be eligible for a Section 179 deduction for the entire cost only if it's exculsively used for business. Employee business expenses are subject to a 2% AGI limitation.

In any case, you will get a deduction from your taxable income IF you itemize. If it's your only itemized deduction it won't likely be enough to make itemizing worthwhile. You do NOT get the entire purchase price back. The tax value of the deduction will depend upon your tax bracket -- anything from 0% to 35%.

Answer 4

When you write off an item that you use for business, what you do is to reduce your tax burden from your business earnings, so that that depreciation, probably 10% per year, $250 each year on $2500 purchase of equipment). The $2500 laptop might bring down the tax bracket you have to a point below the poverty level whereupon you would get a refund of all money you paid into the tax system. But you would not get your $2500 back. That is not how it works. You have to not make any money or have business expenses (write offs)that bring down your tax burden on your higher income to pay less taxes. If you used this purchase to change your tax bracket, so that it brought you from a 28% bracket down to a 15% bracket, then you would be paying a lower tax rate and so if you grossed before taxes near say $100k and had write off(s) that brought you down to $28k, then you might be paying signifigantly less tax and that might pay for part of your computer. 28% of $100k is $2800, 15% of $28k is $420, so then you would have your computer paid for or near it. But they have to be legitimate write offs and your computer would be one amongst many to get that result.

Answer 5

Unless the laptop is specifically required in order to do your job it is NOT deductible. You will only get back the percentage of the value of the laptop that you paid in taxes, probably less than 25%

In order to to deduct it at all you first have to meet the requirements to itemise versus taking the standard deductions. To itemise you need to have considerable charitable, medical, property tax and/or mortgage interest payments.

I'm guessing you don't have these kinds of deductions an so I don't think that you will be able to deduct the laptop on your taxes.

Answer 6

You can claim a Sec. 179 depreciation deduction to the extent that the laptop is used for business purposes.

And no, you do not get the full payment back. What you do get back is, if you use that laptop 100% for business purposes, your tax savings will be $2,500
times your marginal tax rate of either 15%, 28% or 35%.

I'll let you figure the math.

Answer 7

The term "write-off" refers to taking an itemized deduction on schedule A or an expense on Schedule C, if you are self employed. If you take the "standard deductions" your laptop purchase will not have any effect unless you are self employed. If you are able to "write-off" any purchase it simply reduces your taxable income which will reduce your tax. But this is dependent on your tax rate. If you are at the 15% rate the $2,500 purchase will reduce your tax by $375 if you are able to take the deduction or expense.

Answer 8

Your mileage, postage, expenses of resume production, toll calls, accommodations and return and forth for an out of city interview, are all deductible on time table A Miscellaneous Deductions, to the quantity those deductions exceed 2% of your earnings. Interview outfit isn't deductible.