~The Daily Grind~ 12/31/09

[AlexWyattMommy]

I was the GOOD girl today.

 

[PinballFamily]

Do you write the depreciation of the computers off on your taxes?

No. But your question sent me scurrying off to the IRS website for info on this question. For home-based businesses, it is a pretty clear case, but not for individuals.

It seems that if home computers are used for producing taxable income, they are able to be depreciated using the straight-line method. But, it seems murky and less than clear concerning the proportion of time the computer is used for personal use compared to investments and whether or not you have to use some sort of ratio for the deduction... For example, if I use my computer 90% of the time for personal use and 10% to manage my investments, it would appear that I could only depreciate 10% of it...?

The other publication cited below (IRS Publication 946) seems more geared to businesses than individuals, but it does mention computers in the home...


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IRS Publication 529 - Miscellaneous Deductions
Depreciation on Home Computer

You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. But if you work as an employee and also use the computer in that work, see Depreciation on Computers or Cell Phones under Unreimbursed Employee Expenses, earlier. For more information on depreciation, see Publication 946.

IRS Publication 946 - Miscellaneous Deductions
Property Used in Your Business or Income-Producing Activity

To claim depreciation on property, you must use it in your business or income-producing activity. If you use property to produce income (investment use), the income must be taxable. You cannot depreciate property that you use solely for personal activities.

Partial business or investment use. If you use property for business or investment purposes and for personal purposes, you can deduct depreciation based only on the business or investment use. For example, you cannot deduct depreciation on a car used only for commuting, personal shopping trips, family vacations, driving children to and from school, or similar activities.
You must keep records showing the business, investment, and personal use of your property. For more information on the records you must keep for listed property, such as a car, see What Records Must Be Kept in chapter 5. Although you can combine business and investment use of property when figuring depreciation deductions, do not treat investment use as qualified business use when determining whether the business-use requirement for listed property is met. For information about qualified business use of listed property, see What Is the Business-Use Requirement in chapter 5.
Office in the home. If you use part of your home as an office, you may be able to deduct depreciation on that part based on its business use. For information about depreciating your home office, see Publication 587.

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So, it sounds like I'd have to track the computer usage - the "investment managing" portion of our computer use is not so much - maybe 5-10% of the time? - so the straight-line depreciation on our $2,000 computer would be $400 a year (x 5 year life span), and we'd be able to claim 5-10% of that ($20-40 a year) as a "miscellaneous deduction" on our Schedule A. We'll have to think about it, but thanks for the question, Buffy. It made for an interesting debate as others in the house are scrapping, others are making ice cream, and others are popping a movie in the DVD player!

 

[BernardandMissBianca]

talk to your tax guy (if you have one). We depreciate all of our computers, mine included. Not sure what formula our tax guy uses but I could ask him. We have an appt at the end of Feb.

 

[PinballFamily]

We are "our tax guy"!!!!!! No help there...!

Hey, if we could claim a deduction based on the time I spend on the DIS...now, THAT would be substantial!!

 

[BernardandMissBianca]

Ah, we have a tax guy because DH has a side business so some years we file 1099 sometimes we file straight W-2, other years it's both.

 

[morgansmom2000]

Jennifer I just read on the other thread that u got the heart
punches and I saw a pic of them. I NEED them. Right now.
Does the ban count if I give jennifer the money and she
buys it for me??

LOL, no! That's a good question though. Let's just trade money

 

[party of 3]

That will work for me!! There might be things ghat I just
need. Like those heart punches!!!!!!