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Tax Tips for Writers

Posted by Range Officer Rhonda on November 2, 2009

Computers and all those gadgets

 

This is a big subject, but I will try to keep it general and brief enough to give you details but not overwhelm you with information. Can you write off your computer and all the little gadgets that attach or work with it? Absolutely – even if you didn’t buy it this year, you can write off a computer and all its supplies and peripherals.

 

First, let’s discuss when to write it off. If you bought it in the current year that you are dealing with your taxes, then that is simple – get the receipt and write it off. But if you got it in the prior year[s] – we use a law that is allowed by the Internal Revenue Service called ‘Placed in Service’. Well, since you have never written it off before, then the current year is the year placed in service – for your business. You cannot write off the full new price if it is more than a couple years old, but you can write off a large chunk of it. If you bought it in a prior year, you will have to allow for a reasonable amount of depreciation or get an estimate of replacement value. Those are things you should discuss with your tax person.

 

What items can you write off? A general list would be:

  • The actual computer, monitor & attachments that came as the packaged set
  • Additional items you purchased to go with the computer, such as printer, camera, flash drives, desk, carry case and speakers.
  • Things you use with your computer such as paper, toner, software, power cables.
  • Internet provider service, whether a sole item, bundled with your cable or bundled with your telephone service.

 

How much can I write off? This depends on whether your business made a profit or not. If you have a profit, you can write the whole entire computer off using something called a Section 179 Depreciation deduction. But if you don’t have a profit, then you must depreciate the computer and take a little each year, generally for five or seven years. But this is only for items that cost $250 or more. Each item that you purchased; such as the desk, software, carry case or printer should be written off separately. There are no limitations on how much income you made in order to write off the smaller items. A rule of thumb is this: if it cost over $250, it is an asset and should be written off over a period of years or as a special Sec. 179 deduction. If it is under $250, then it is an expense and should be written off in the year purchased or the year placed in service.

 

There are so many different places and ways you can use your computer as a write off, so in each individual case you will have to ask your tax prep person where it goes on your return. This information is for general discussion use and should not be taken as advice on how to prepare your own tax returns. Yep, I always got to throw that little CYA in there!

 

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One Response to “Tax Tips for Writers”

  1. Hi Rhonda:
    Thanks for your clear advice. The reminder is especially good for those little add-ons that add up but are easy to forget like thumb drives, an extra cable, etc.

    -Matilda

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