I bought a computer in December 2006 for 95% business use (sole proprietor). The cost for it was around $900 dollar and I'm using the 5-year depreciation. I don't know much about taxes and thought it would help me to pay less, but when I plugged in the numbers I saved $45 dollars for the first year. Does that sound right? I really did not need a new computer and if I had known that this is all, I could have waited another year or so. I'm using taxact software. Thank you.
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That amount makes sense to me.
When you place assets in service in the last 3 months of the year, you may be subject to mid quarter depreciation calculations. It depends on the depreciable assets acquired during the year and when you acquired them. This has the effect of limiting the first year's depreciation deduction. Another option to look into is expensisng under sec 179. Whether or not that is a good idea for you in your circumstances is another matter. ___________________________________
-----> real address on hobokeni or hobokenx
You'll get more in subsequent years. Since you bought the computer in late in the year (December), you got very little depreciation on it. Next year, you'll get a lot more.
The $45 amount is right if you placed the computer in service in the 4th quarter of the year, the depreciation rate for the first year is 5% ($900 x 5% = $45). You may instead be able to deduct the cost as a section 179 deduction. There are some requirements, such as the computer must be used at least 50% for business. You can get more info from Publication 946. Rudy
Disclaimer: The posted answer is for educational purposes only and Lizcano Tax Services, LLC and/or Rodolfo Lizcano have not been engaged to render any tax, accounting, legal, or other professional services.
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