schedule A, line 23, miscellaneous deductions

[POCAHONTAS]

new client has been preparing his own taxes for several years, this year wants to try a preparer. He is a high school teacher, says he has been depreciating his computer every year on line 23 Schedule A. Can he do that? Shouldn't the computer be required by his employer as part of his employment?? Being a school teacher, I would think it would be ordinary and necessary for him to use his computer but can he depreciate it on line 23??
The same client's wife is a nurse, she lost some of her books in a flood, so he wants to deduct those books on form 4684 (casualty or theft loss) as income producing property??
Can he do that?? thanks
'

[HiltonL]

That's a lot of books, if their value exceeds the 10% of income floor for casualty/theft.

[Burke]

On the computer, that is a common expense for teachers, depending on what they use it for, include DSL line, too. They need a log to document.

[POCAHONTAS]

so Burke you are saying that he can depreciate the computer on line 23 and how would he claim the DSL line??
thanks

[taxea]

is this a computer that is at home? Most schools provide computers to teachers in the classroom. When did the IRS change the rules? This is not a 2106 deduction unless the teacher has a letterhead authorization signed by the principal that says the computer is necessary and for the convenience of the school for the teacher to complete his/her duties.
I wouldn't not include it and the prior returns should be amended before the IRS catches the error.
If he amends it is cheaper in the long run than if the IRS catches it because:
1. they can go back 6 years and if they see this error consistantly repeated
2. they can go back 10 years and
3. if this is being done they will surely check for other errors on each return

lots of penalties and interest here. taxea

[Lion]

School Teachers

My husband the teacher is required to log into a specific software program and its database of students, grades, etc., to report periodically. Since the school is locked to him and other non-administrators by midafternoon, he has to do this from home in the evenings and weekends. He also has to research what music to put in his budget to purchase the next year and price musical and video equipment and a multitude of other activities requiring a computer and internet access with not very many minutes before and after school when the school is open (and being a chorus teacher, he's usually rehearsing his ensemble or setting up audio-visual equipment for the school and can't be in the computer room). I make him keep a log. But, I definitely take his unreimbursed (and aren't they all) teaching expenses on Form 2106.

[DTS]

School

Not to throw ice water on your statement, but have you seen the type of stipend schools are paying their teachers in the form of expense accts to conduct classes, let alone computers for each and every teacher and student? This just has not been my experience with all my teaching clients.

Honestly, they are spending a lot of their own money so they can have the teaching tools they need.

D

[Lion]

Computers

There's only one computer in my husband's classroom, and it's a hand-me-down from the high school. He shares a printer with the band room next door. He gets NO stipend for his before and after school activities, ensemble, audio-visual director, assemblies, etc., nor for the performances he directs and produces in the evenings, musical concerts for the choruses, bands, and orchestra to perform. He doesn't get reimbursed for his mileage to set up for concerts at city hall (school auditorium too small to hold parents for all performers) or to go to another school to pick up the shared risers for his chorus to use. You should see all the equipment the computer teacher purchased for kids to use in HIS classroom! And, don't get me started on the science teacher and his purchases to supplement the budget....

[Gene V]

Remember, they are easing up on computer expense under the new law.(money from
QTP use for education)

Computers as Qualified Education Expenses in 529 Plans

TheTaxBook™ 2008 Tax Year 1040 Edition, page 12-4. Distributions from a Section 529 Qualified Tuition Program (QTP) are not taxable if used to pay qualified education expenses in the year of distribution. Qualified education expenses include tuition, fees, room and board, books, supplies, and equipment required for enrollment or attendance of the designated beneficiary at an eligible educational institution.

New for 2009 and 2010. Qualified education expenses for a QTP also include the purchase of computer technology or equipment or Internet access and related services, if such technology, equipment, or services are to be used by the beneficiary and the beneficiary’s family during any year the beneficiary is enrolled at an eligible educational institution. This rule does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature.

Author’s Comment: The language in the code says nothing about using the computer, software, and Internet exclusively for educational purposes, nor does it say how much of the time spent on the computer must be for educational purposes. As long as the student uses the computer, other family members (and the student) can use the computer for personal purposes without having to allocate the costs between personal and educational use (with the exception of the cost of sports, games, and hobby software).

[HiltonL]

On the computer, that is a common expense for teachers, depending on what they use it for, include DSL line, too. They need a log to document.

I'd be careful with expensing the Internet Access services. Since such services are clearly dual-use, the teacher would have to keep a log and sort out the personal vs work.
The benefit here would be minimal for the exposure/red flags for audit IMHO.

--Hilton

[Jesse]

Peek-a-boo

Do you have a something to back this up?

This is not a 2106 deduction unless the teacher has a letterhead authorization signed by the principal that says the computer is necessary and for the convenience of the school for the teacher to complete his/her duties. taxea

To deduct on Form 2106: An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary.

It's another example of "facts and circumstances", it is not necessarily black and white. I just had a teacher ask me this last week so I thought I would let him answer the questions for me so here was my reply:

In order for you to deduct the computer it MUST be an ordinary AND necessary expense. An ordinary expense is one that is common and accepted in the taxpayer's line of work. A necessary expense is one that is helpful and appropriate for work. Can you answer yes to the question is the computer an ordinary and necessary expense? Then you must determine how much is "mostly" for school? A log of usage personal vs. work or some type of substantiation would be necessary to determine the percentage of each. The percentage of school use if an ordinary and necessary expense can be deducted.

On another note, it's a miscellaneous deduction thrown in the 2% pool, I doubt the teacher is buying a new computer every year, and if they are depreciating the cost, how much is actually going to exceed the 2%, it's not going to be worth going back one year, let alone ten. Go ahead, narc on 'em!

[FEDUKE404]

EMPLOYEE claiming a computer is not easy to do

is this a computer that is at home? Most schools provide computers to teachers in the classroom. When did the IRS change the rules? This is not a 2106 deduction unless the teacher has a letterhead authorization signed by the principal that says the computer is necessary and for the convenience of the school for the teacher to complete his/her duties.
I wouldn't not include it and the prior returns should be amended before the IRS catches the error.
If he amends it is cheaper in the long run than if the IRS catches it because:
1. they can go back 6 years and if they see this error consistantly repeated
2. they can go back 10 years and
3. if this is being done they will surely check for other errors on each return

lots of penalties and interest here. taxea

I agree with taxea on this one.

Unless the rules have changed, no employee could deduct any computer expenses on a personal tax return unless they could provide a letter from the employer REQUIRING them to have such a computer. (Most employers would never write such a document, and conversely if the facts supported such a need they probably would provide a computer.)

The IRS just drew a very deep line in the sand, not unlike when they created the rule that no matter what circumstances existed, the cost of the first telephone line to a house could never be deducted as a business expense. (This would include the brain surgeon at the Mayo Clinic.) I've often wondered how they follow that rule now with everyone having cell phones.

FE

[FEDUKE404]

Different rules exist for computers

Do you have a something to back this up?

To deduct on Form 2106: An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary.

It's another example of "facts and circumstances", it is not necessarily black and white. I just had a teacher ask me this last week so I thought I would let him answer the questions for me so here was my reply:

In order for you to deduct the computer it MUST be an ordinary AND necessary expense. An ordinary expense is one that is common and accepted in the taxpayer's line of work. A necessary expense is one that is helpful and appropriate for work. Can you answer yes to the question is the computer an ordinary and necessary expense? Then you must determine how much is "mostly" for school? A log of usage personal vs. work or some type of substantiation would be necessary to determine the percentage of each. The percentage of school use if an ordinary and necessary expense can be deducted.

On another note, it's a miscellaneous deduction thrown in the 2% pool, I doubt the teacher is buying a new computer every year, and if they are depreciating the cost, how much is actually going to exceed the 2%, it's not going to be worth going back one year, let alone ten. Go ahead, narc on 'em!

There are several misstatements of fact in your approach.

You might want to take a look at lower right column on page 3 of Publ 529....

Depreciation on Computers or Cell Phones
You can claim a depreciation deduction for a computer or cell phone that you use in your work as an employee if its use is 1) for the convenience of your employer and 2) required as a condition of your employment.

http://www.irs.gov/pub/irs-pdf/p529.pdf

FE

[WhiteOleander]

It has to be at the convenience of the employer to deduct a home office. But, an employee keeps track of their own expenses to be deducted if they otherwise qualifiy. No letter from the employer is required to deduct employee expenses.

[FEDUKE404]

Perhaps I cannot read too well

It has to be at the convenience of the employer to deduct a home office. But, an employee keeps track of their own expenses to be deducted if they otherwise qualifiy. No letter from the employer is required to deduct employee expenses.

Isn't there a slight contradiction to this excerpt/publication and your personal viewpoint?? Perhaps I just don't understand the words "convenience" and "required"???

Depreciation on Computers or Cell Phones
You can claim a depreciation deduction for a computer or cell phone that you use in your work as an employee if its use is 1) for the convenience of your employer and 2) required as a condition of your employment.

http://www.irs.gov/pub/irs-pdf/p529.pdf

FE