Are my electronics and computers deductible?
BY MICHAEL J. MARTINEZ
Q: Can I deduct my computer, cell phone and other personal gadgets from my income taxes if I use them for work?
A: The advent of portable, highly connected personal technology has helped blur the line between the workplace and, well, anywhere else. Whether you're doing last-minute work on a project in the den, checking your e-mail on your Blackberry during your commute or fielding cell phone calls on the weekend, those work uses could become tax deductions.
"Could," however, is the operative word. The Internal Revenue Service has made it difficult to claim deductions for your personal technology in order to prevent everyone logging on at home from calling it a work deduction, according to Kathy Burlison, director of tax implementation at H&R Block Inc.
First of all, a person's use of personal technology for work purposes has to be both "ordinary" and "necessary" -- both of which have specific definitions as far as the IRS is concerned.
An ordinary use means that the technology in question is in common use in the person's line of work. Lawyers often use personal computers on the job, for example, but factory workers do not.
Likewise, the use of a given technology must be necessary to the completion of an employee's work. Again, a lawyer's use of a computer for communications and writing legal briefs can be considered necessary, but a factory worker's job does not hinge on his access to a personal computer.
For self-employed entrepreneurs, passing the ordinary and necessary tests are enough to qualify for deductions. But for employees of someone else -- the majority of American workers -- there are two additional tests.
First, owning and using a computer or cell phone must be a condition of your employment.
"Basically, if you were to go to your boss and say, 'I decided to drop my cell phone service,' and he would say, 'OK, you're fired,' then you can safely say that having that technology is a condition of your employment," Burlison said. "Few of us are in jobs where owning a computer or cell phone is that critical."
Second, the work you do must be for the convenience of the employer -- not just yourself. The employer must deem it necessary to the business' success for you to use your personal technology. Simply enjoying the convenience of checking e-mail from your own handheld or laptop isn't enough.
"Someone who wants to deduct their computer should obtain from their employer a letter stating that the employment requires him to work at home and use his own computer," said Shelby Goldgrab, adjunct professor of accounting at Yeshiva University's Sy Syms School of Business. "If you have that, then that will go a long way."
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