Can I deduct equipment expenses for a job I began overseas?
This year I began teaching English in Japan, but I had several hundred dollars worth of preparatory expenses, including a new computer. Are these eligible for equipment tax deductions?
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I'm not an expert, but here's my [CO].02.
Deductions for business expenses are subject to the 2% rule. In other words, you can only deduct that which exceeds 2% of your AGI (Adjusted Gross Income). For example, say you have an AGI of ,000, and you buy a laptop that costs 0. You won't get a write-off from that, because 2% of ,000 is ,000, and you can only deduct business-related expenses in excess of that ,000.
If you have an AGI of ,000 and buy a ,000 laptop, you can deduct a maximum of ,000 (,000 minus 2% of ,000 is ,000 - ,000 = ,000).
Additionally, you can write off the laptop only to the extent that you use it for business. So in other words, if you have an AGI of ,000 and buy that ,000 laptop, but only use it 50% for business, you can only write off 0.
Theoretically, they can ask for verification of the business use of your laptop. A log or a diary would be what I would provide, but I'm not an IRS agent.
A computer is a special case because the IRS thinks that you might be using it for personal applications. You may need to keep a log, or be able to state that you also have another computer for non-business use.
That said, if your schedule C shows a small profit then you don't need to itemize expenses, just state the total.
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