Tax Guide

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Deductible Electronic Gadgets

In this age of the mobile office, technology lets us do just about anything we used to do when we were desk-bound – only now we can do them anywhere, anytime. And that means that our computers, tablets and smart phones can be regarded as employee expenses and are eligible for a deduction – depending on why they’re necessary and how they’re used.

What’s Covered as Tax Deductible

Generally, nearly anything in this category can be deductible – if it meets the IRS test for an ordinary and necessary expense. What’s ordinary? If an expense is common and accepted in your trade, business or profession, it’s ordinary. To be necessary, an expense must be appropriate and helpful to your business or job. It does not have to be required to be considered necessary.

Think of electronic gadget expenses in three broad categories:

  • Hardware – computers, tablets, smartphones, standard cell phones
  • Peripherals – printers, scanners, cases, cables
  • Connectivity costs – cell phone modems, data charges and Internet service

Company-supplied cell phones may be seen as nontaxable working condition fringe benefits. If the cell phone is given to the employee for substantial business reasons, not as any sort of compensation or to promote goodwill, it could qualify as a fringe benefit. Examples of substantial business reasons include:

  • Need to contact the employee at all times for work-related emergencies
  • Requirement that the employee be available to speak with clients at times when the employee is away from the office
  • Need to speak with clients located in other time zones at times outside the employee's normal workday

Before your tech purchase can be considered deductible, though, you have to determine whether your expenses meet two tests:

  • For the convenience of your employer – Your use of the item is for a substantial business reason of your employer. You must consider all facts in making that determination. If you use of your own computer during your regular working hours to carry out your employer’s business, that's generally for the convenience of your employer.
  • Required as a condition of your employment – You cannot properly perform your duties without the item.

IRS Publication 529, Miscellaneous Deductions, puts it this way: “It is not necessary that your employer explicitly requires you to use your computer. But neither is it enough that your employer merely states that your use of the item is a condition of your employment.”

See also:
Tools and Equipment