Tax Guide

Get answers to all your questions about taxes, personal finance, insurance and more.

Deductible Tools and Equipment

Generally speaking, the cost of tools and equipment to do your job is tax deductible. The IRS looks at such deductions as being ordinary and necessary expenses. 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. An expense does not have to be required to be considered necessary.

In a nutshell, you need to show that the expense was for items to do your job or trade properly, and that your employer doesn’t provide the items.

Qualifying purchases can include electronic gadgets, such as computers, tablets, and smart phones, as well as hand tools, power tools and the like. A note about usage: only the portion of the cost related to your job is deductible. If a computer or tablet, for example, is put to personal use 20 percent of the time, the deduction would be for the remaining 80 percent of the cost of the item.

When you claim your expenses on your tax return, you may find it helpful to attach a letter from your employer explaining that the purchases of tools and equipment are needed for your job. Make sure your employer mentions why the tools or equipment are needed in your job.

See also:
IRS Publication 529 – Miscellaneous Deductions


Ready to file your taxes? Start Free!