Can I claim a camera to use at work in my taxes? If so, is this expense 100% claimable?

Hello,

I am a Software Engineer and from time to time, at work, we buy pictures for the websites that we develop and hire photographers for taking pictures for advertisements. I have always had a huge interest in photography and recently started reading a lot of books to educate myself as much as possible to do it for both enhance offerings at work and also do some freelancing.

Every year when I get my Christmas bonus a lot of it goes to taxes and whatnot. I could use a small portion of the taxes to buy a nice professional camera with an additional set of lenses especially for portraits for use in my profession and as a freelancer. I have been reading that useful and legitimate business expenses that an individual does not get reimbursed from their companies can be claimed in the individual?s personal taxes. I have been wondering if I could do that with the camera that I want because of what I am planning to do with it. As a freelance-photographer-to-be could I also claim it, especially since I will be including whatever income I get from this in my personal taxes for 2009?

An example of what I could do at work is that when a customer wants to include a picture of their staff or building for that matter, I would be able to do it if I had the equipment. Also, when making brochures and flyers for customers from the company of for other people who would pay me for it as a freelancer, a good camera would be essential to produce pictures with enough resolution to be able to work with. Another thing I would like to do is generate revenues online in blogs by doing photoblogging and perhaps selling some of the work that I would be able to achieve.

I would appreciate any advise or help anybody can provide to guide me in this matter. I am a person that likes to play by the rules and want to make sure that what I am thinking is legal.

Thanks in advance,

Caonex

Reply to
Caonex
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If you're using the camera for your work only, try to get your employer to reimburse you for it (but they might only do this if they get to own the asset afterwards and you use it 100% for their business though they will tolerate personal use). You can, of course, deduct it on your own tax return, but any deductions are subject to the 2% of AGI limit, meaning that only deductions above 2% of your AGI are deductible, which often makes the deduction worthless.

If you're planning to use the camera for freelance work, then you're basically starting your own business. You report income and expenses on Schedule C. However, be sure to read the rules about "business versus hobby". It's a very common search term, and you'll find lots of info on the internet. Basically, if you're in a hobby, then expenses are limited because of the 2% of AGI rule. Generally, your business should show a profit in 3 of 5 years, and you should always keep good books and intend to make a profit.

Now, assuming you meet the conditions above, then you can deduct the camera on Schedule C. But because the camera is an asset, it has to be depreciated, usually over 5 years. To simplify the return for state and federal AMT purposes, you can take straight line depreciation over 5 years. But be aware that there is accelerated depreciation, and section 179 depreciation. I'm not expert on depreciation, so hopefully others will answer. The IRS publication is

946. I'm not sure if you have to use a certain method, like straight line, accelerated.

It's possible to think of a camera as 3 year property, as digital camera become obsolete easily. You could probably take 3 year depreciation, but be prepared to answer questions from the IRS.

A camera is most likely listed property, because you can use it for personal use. So you have to follow special rules. One of them, if I'm not mistaken, is listing the item on form 4562 each year you file the tax return.

Also, you have to allocate the use of the camera between business and personal use. Only the business portion is deductible. If you used the camera 40% for business, then only 40% of the depreciation is deductible. When the business use is below 50%, section 179 is not possible, and if you took section 179 in a previous year, you have to untake or recapture it.

Finally, be aware that when you dispose of the camera there may be tax due because of depreciation recapture.

Reply to
removeps-groups

Not only is 179 a possible option, but Sec 168k special 50% Bonus Depreciation is the default, and you have to actively elect to opt out of bonus depreciation :^( I predict that will hit a lot of small businesses who use do-it-yourself tax prep.

nus is the default now, and you actually have to actively opt out of 50%

What makes a camera 3 year property? Is it livestock? Racehorses? Tractor rigs?

I have not looked it up, but unlessa camera is specifically called out as 3 or 5 year property, there is no authority to call it other than 7 yr property.

Reply to
Arthur Kamlet

Replies plus open-ended questions about computing devices interleaved below.

[...]

Having the employer provide the tool is the best option for the employee. Otherwise, if it is a computer peripheral device (see below), to be deductible as an unreimbursed employee expense it would have to be for your employer's convenience and required as a condition of employment. Even then, it would still have to be depreciated, not expensed.

But even if you don't opt out, if it is listed property and business use later falls below 50%, the end result as the same as if you opted out, right? So just let the listed property sit on the shelf for half a year before disposing of it.

Straight-line depreciation is probably the optimum choice, all things considered.

If it is a digital camera and the raw images are processed only subsequent to plugging it into your computer, it would be computer peripheral equipment with 5-year property class life.

From Pub. 946: "A computer is a programmable, electronically activated device capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention. It consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities.

"Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. "

(The pub goes on further to state that devices primarily for entertainment or amusement are not computers).

Everything in this definition is pretty clear to me except "programmable". Does that mean, programmable by the end user, or simply programmable by someone? If I can make extensive adjustments to settings via a menu system that requires a user manual to fully comprehend, is the device programmable? Or, as another example, when Science Officer Spock of Starship Enterprise issues the command "Computer, compute to the last digit the value of pi", is he programming it? (I ask this question in anticipation of voice-activated personal digital devices becoming common someday soon...)

As for peripheral equipment, does it mean *only* controlled by the CPU of a computer, or can it optionally be operated stand-alone? As a simple example, I have a combo printer/copier/scanner/fax which connects to my computer and is controlled by software on my computer, but also performs significant functions when not connected. The digital camera falls into this same category, IMO.

-Mark Bole

Reply to
Mark Bole

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