If you’re self-employed, you have to purchase your own equipment, often at great expense. Thankfully, you can deduct business equipment costs on your taxes. Let’s go over the rules.
You can deduct the cost of the equipment you buy for your business. Let’s say you’re a professional photographer, you could deduct the cost of your cameras.
There are several different ways to take this deduction:
Most business owners want to deduct as much as possible the first year they buy equipment, instead of deducting a portion of the cost over many years. Thus, you’ll probably want to use Section 179 or the de minimis safe harbor.
If you use the photography equipment both for your business and for personal use, you may only deduct the business use percentage. For example, if you use a $500 camera 75 percent of the time for business, and 25 percent for personal use, your deduction is $375.
Photography equipment falls within a special tax category called “listed property.” The IRS fears that taxpayers might use listed property items for personal reasons but claim business deductions for them. For this reason, you’re required to document your business use of listed property. You can satisfy this requirement by keeping a logbook or similar record showing when and how the property is used.
For more information about deducting business equipment, Section 179, and the de minimis safe harbor, see IRS Publication 946, How to Depreciate Property.