Small Business Tax Policy

2018 Tax Update: Can You Depreciate Your Laptop if You’re a Freelancer?

The new tax code changes now allows laptop/computers to be depreciated like other business property.

For someone who is a freelance/remote worker, you know all to well the struggles of organizing your expenses. If you work for yourself then you’re entitled to more deductions than most remote workers:

  • Home office deduction
  • Deduction for supplies
  • Accelerated depreciation on equipment
  • Deductions for Travel/Continuing Education/Conferences

But what about your laptop or home computer? You don’t use it 100% for business and you’ll enjoy the occasional cat video from time to time. Is your laptop/home computer a deductible expense?

Well in 2018 it’s going to be even easier for a freelancer to write off their personal/business computer.

Computers as Listed Property

The IRS has a list of property that requires a higher degree of substantiation and has limitations on its deductibility. Listed property is any of the following:

  • Passenger automobiles
  • Property used for recreation, amusement or entertainment
  • Computers and peripheral equipment

Before 2018, to take a depreciation deduction for a computer you would have to substantiate the amount of business vs personal use. For example, you could have a log showing that you used the computer as a work computer from 9am to 5pm Monday through Friday and exclusively used the computer for personal use on the weekends.

If the computer was not used more than 50% for business use then you would not be able to take accelerated depreciation or section 179 depreciation. This means you would have to take straight line depreciation on the computer.

Computers Removed From Listed Property in 2018

In 2018 computers are no longer classified as listed property. As a result, the cost of a computer can be deducted or depreciated like other business property and are no longer subject to strict substantiation requirements.

The removal of computers from listed property status will allow more remote employees to depreciate or expenses the cost of computers as well.

As an added bonus, computers placed into service after December 31, 2017 may qualify for bonus depreciation even if the computer is used for less than 50% business use. This means you may deduct 50% of the computer’s cost in the year it was acquired.

However, if you wanted to write off the entire computer using Sec. 179 depreciation you’ll need to use the computer more than 50% for business use.

Consult a Tax Advisor

To know if you’re eligible to deduct your computer as a business expenses consult with a tax advisor. Not only will a tax advisor like a CPA be able to answer any questions you have regarding your taxes, but they may even offer tax services for freelancers. You can check here for more info on Tax Planning for Freelancers.

Remember, every tax situation is different so the only way to know for sure is by consulting a trusted advisor.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

Photo Copyright: <a href=''>dedivan1923 / 123RF Stock Photo</a>

1 comment on “2018 Tax Update: Can You Depreciate Your Laptop if You’re a Freelancer?

  1. Interesting read

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