Do you get money back for a Tax write off?

Question

Ok, I've been getting some mixed answers please help. Say for example that I run a business out of my office in my home and I need to purchase a computer. When I write this computer off as equipment needed to run my business will** The money be refunded back with taxes? or **Will the $500 computer be non taxed if it exceeds my business income for that year. Basically, with the computer and no income to the business it becomes a loss, so will it do me no good to write it off.

Answer 1

A "tax writeoff" or deduction is subtracted from your income before you figure your tax. You don't get the amount of the deduction refunded to you. You just don't get taxed on that portion of your income. The percent that's your tax bracket is what you essentially save in taxes - so if you are in a 15% tax bracket and have a $500 writeoff, it saves you $75 in taxes, 15% of $500.

Some expenses are written off in the year the money is spent, others must be depreciated (written off partially each year over the life of the item).

If you have no income for the year but want to write off losses, be prepared to show the IRS that you were really trying to make money in your business, or it could be considered a hobby and not a business, and then losses wouldn't be deductible against other income.

Answer 2

You have several problems. If you have never made a profit, is it really considered a business by the IRS. A computer is usually considered a depreciable asset. You can choose to expense depreciable assets under certain rules. However, when you have depreciable assets you can set a reasonable base price on what you will depreciate. $500 or $600 for a small legit business is not unreasonable. So you would depreciate anything costing more and expense anything costing less. Also a $500 computer is not an expensive item for a business and I would expense it one way or the other. Just be careful, that the IRS does not treat your business as a hobby and don't let them decide you are trying to defraud the government or they can go back to the beginning of time with your tax returns. Once the IRS gets your number, they will cause you so much hassle and for years and years to come. Best be very careful here. . .The tax savings on that computer are just a drop in the hat to what they can make it cost for you. . .

Answer 3

As a schedule C filer, which I assume you are, you're entitled to a laundry list of deductions, but you need to show more than $500 in income for it to make a difference, so writing it off is a waste of time until you start showing an income. Also. things like computer depreciate and the irs gives you between 3-5 years to depreciate some items, it varies so I'm not sure .

Answer 4

there is what is called earned income credit if you don’t earn a certain amount you still get money back etc. the best advice is claim every expenses it will drive your tax burden down at the end of the year regardless your profit or loss. If you claim a loss, Keep in mind you can only claim a loss 3 out of 5 years in Biz . Also are you deducting monthly medical and office space in your home % of electricity etc. you should have allot more to deduct than the CPU you mentioned. Any way Good Luck

http://www.irs.gov/pub/irs-pdf/p596.pdf

Answer 5

That is a business expense and depending on how you class it(depreciation or 179) you would get to take that amount and subtract it from you gross income. this would give you your taxable income. The IRS is not going to send you any money for buying a computer. However if it is green you may try al gore.

Answer 6

If you are working two jobs and go directly from one to the other, you can deduct the cost of gas between job #1 and #2. However, if you return to your home and then leave again to go to job #2, you will NOT be able to deduct mileage. If you are going directly to job #2, it is important that you keep an accurate account of what you are paying for each tank of gas and the mileage between the two jobs. Most people have one job and they are unable to deduct the cost of gas (government might have to pay back a couple of dollars more on income tax returns, and they aren't going to do that). As for where you put this information on your tax return, contact the IRS. They will be able to help you.