Deducting Computer

Today TaxMama hears from Jeff in DC, who tells us: “I teach online for a college. I want to purchase a computer for only this use. Can I deduct the entire price of the PC for 2007, if I purchase before the end of the year? What IRS form do I use?”

Dear Jeff,

Good for you. We need lots of good teachers.

But as to deducting the computer? I haven’t a clue.

If you use the computer exclusively and 100% for your teaching, and the school doesn’t supply the

computer or reimburse you for it – then, yes, you can deduct the cost of the computer as a miscellaneous
deduction on Schedule A.

If you have lots of other employee expenses, you may want to use Form 2106 – Employee Business Expenses.

Now, will you get any benefit from the deduction? Again, that will depend on whether or not you’re already

itemizing your deductions (using Schedule A) – AND how much your adjusted gross income (AGI) is. The AGI is the bottom line on Page 1 of your Form 1040 (or the first line on Page 2 of your Form 1040). You see, IRS first deducts 2% of your AGI before you can use these deductions.

With computer costs being so low these days, it’s quite likely you won’t get the benefit of the kind of deduction you expect. After all, 2% of $50,000 is $1,000. Your computer would have to cost more than that just get the benefit of any deduction at all.

Incidentally, you will need proof that your employer requires you to use your own computer for these classes. In writing.

And if you use the computer for personal use, games, e-mail, investment research, etc., keep a usage log of the computer time and deduct only the business use percentage. Depressing, isn’t it?

And remember, you can find answers to all kinds of questions about employee business expenses, and other tax issues, free. Where? Where else? At TaxMama.com

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