Deduct Your Equipment Costs
You can deduct up to $102,000 worth of equipment that is used in
a business, up from $24,000 just a few years ago. For example, you could deduct the cost of a computer.
If the computer is used 60% of the time for business purposes, you can deduct
60% of its cost. Equipment in excess of $102,000 can still be deducted
over a number of years as it depreciates. For example,
the cost of a computer could be deducted over 6 years, one sixth of it
each year.
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Deduct Your Equipment Costs 
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Time to complete:
| Not long |
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Money you'll spend:
| Equipment costs |
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What you'll get:
| $280, if you deduct a $1000 computer in the 28% bracket. |
Step-by-step instructions:
- Buy a good computer, one that will last you for a few years. Save
the receipt (and receipts for other equipment) in a folder marked "Equipment
Expenses."
- At the end of the year, decide whether you want to fully deduct the
computer immediately, or deduct one sixth of it each year for six years.
- Here's another alternative: if you've had a computer for a number of
years, you can convert it to business usage. You can then
deduct X/6 of its cost (where X is the number of
years left on the 6-year life of the computer.) For example, if you've
owned a computer for 1.5 years, you can deduct (4.5/6) = 75% of what you
paid for it, assuming it was a new computer when you bought it.
- See this BankRate.com article on Section 179 Equipment Expenses if you want to learn more about this subject.
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Further Reading:
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