Can You Claim a Tax Deduction for a Computer when You Work from Home?

If you have a computer that you use exclusively or partially for business or work from your home, you may be able to claim a tax deduction. According to the IRS, you can claim this deduction whether or not you qualify to deduct expenses for the business use of your home, such as a home office.

When you are in business

Computers and related equipment that you use in your home, but not in a qualifying home office are considered "listed property" for tax purposes and special rules apply for claiming tax deductions. If you use a computer more than 50% for business, in the year you buy it you can claim a section 179 deduction or claim accelerated depreciation. If you use the computer less than 50% for business, you must depreciate it using the straight-line method.

The section 179 deduction allows you to write off the cost of the computer the year you buy it. Off-the-shelf computer software also qualifies for the section 179 deduction. When the computer is listed property, the section 179 deduction you can claim is the percentage of the cost that is for business use.

In determining whether you use the computer more than 50% for business, you cannot include the percentage of time you use the computer to manage investments. You only use the percentage for business use. For example, if you use your computer at home one-third of the time for business and one-third of the time to manage your investments, your computer is listed property but you do not qualify for the 179 deduction since you use it less than 50% for business. If you qualify, the section 179 deduction is claimed on Form 4562, Depreciation and Amortization.

Working at home as an employee

If you use your own computer to work at home when you are an employee, you can claim a tax deduction for business use of the computer only if the use is for your employer's convenience, and the use is required as a condition of your employment. If you meet these conditions, and you use the computer more than 50% for your work, you could claim the section 179 deduction the year you buy the computer or claim accelerated depreciation. If you use it less than 50%, you can claim straight-line depreciation.

If you are an employee, the section 179 deduction or depreciation deduction you can claim for business use of your computer would be reported on Form 2106, Employee Business Expenses. Employee business expenses are claimed as a miscellaneous itemized deduction on Schedule Aand are deductible to the extent they exceed 2% of your adjusted gross income.

Managing investments

If you use your personal computer to manage your investments, you can claim straight-line depreciation for the portion of the cost that is for investment use. But you cannot claim a section 179 deduction the year you buy the computer. The depreciation would be a miscellaneous itemized deduction subject to the 2% of adjusted gross income threshold.

Sources:

Form 2106, Employee Business Expenses

Form 4562, Depreciation and Amortization

Publication 529, Miscellaneous Deductions, IRS

Publication 587, Business Use of Your Home, IRS