iPad Tax Deduction

How to deduct your tablet computer on your taxes

All you Apple addicts out there will be happy to know that you can deduct the cost of your iPad. In order to take the deduction, however, you must actually use your iPad for business. If all you do is play Angry Birds on the subway or entertain your petulant children in the backseat you won’t get any tax benefit.

Business Expense

If you operated a business or practiced a profession as a sole proprietor than you can very likely claim the cost of an iPad as a business expense.

As far as the IRS is concerned, the same rules that govern computers also govern iPads. In order to deduct your iPad (or anything else for that matter) it must be usual, necessary, customary, and reasonable for the type of business that you are engaged in.

In order to take a deduction you must have acquired your iPad specifically for use in your trade or business. You can use your iPad for personal purposes too, but at least 50% of your use must be for business.

If the business use of your iPad was more than 50% but less than 100%, then you can figure the amount of your deduction by multiplying the cost of the iPad by your percentage of business use. For example, let’s say you bought an iPad for $499 and you use it for business 80% of the time. Then the deduction that you can take is ($499 x 0.8 =) $399.2.

You have two options when it comes to deducting your iPad. You can either choose to deduct the entire cost of the iPad in the same year that you bought it (known as a Section 179 deduction) or you can depreciate it over time.

As you will doubtless know, you will need to claim this deduction on Schedule C [Profit or Loss from Business].

Employee Business Expense

Even if you’re an employee you may still be able to deduct the cost of your iPad. First of all, it must meet the same rules of relevance to your business that were outlined above. Furthermore you must actually incur the cost of the iPad. If your employer reimbursed you for it then no dice, you can’t claim a deduction.

An iPad, along with all other employee business expenses, is considered a miscellaneous expense, which are subject to the so-called 2% rule. Your total amount of miscellaneous expenses must be greater than 2% of your adjusted gross income (AGI) in order for you to deduct them.

In order to deduct your iPad you must itemize your deductions, as opposed to taking the standard deduction. This involves filing a Schedule A [Itemized Deductions].

In addition to the cost of the iPad itself, you should also consider deducting the cost of apps that you use for business as well as internet service for the iPad.

Although you have to make sure you meet all of the IRS requirements, an iPad can be a valuable deduction. Be sure to keep this and other deductions in mind when you e-file taxes.

Photo via Blake Patterson on Flickr.