Can I claim a Section 179 deduction for my freelance equipment expenses?

I've been working as a freelancer this past year and had one W2 job where I earned about $15,000. For my contractor work, I invested in some equipment - a laptop that cost around $4,000 (I use it partly for work, partly for personal stuff), a new phone (also mixed use), and an external hard drive that was about $500. Unfortunately, the main contract job I bought this stuff for got cancelled early, and I only made $500 from it. I've been using the equipment for other small gigs through platforms like Fiverr, Upwork, and Etsy, but none of those brought in more than $550 individually. I'm trying to figure out if I can deduct these items on my Schedule C business income using Section 179? And if I can, would it be better to take the full deduction now (for the percentage used for work) or should I depreciate it over time for future gigs? How would I even calculate that? I'm completely lost with all this tax stuff and will probably never attempt to do my own taxes again after this year. Any help would be so appreciated!

0 coins

18 comments

Aisha Jackson

•8M

The Section 179 deduction can be really helpful for freelancers, but there are some things to consider in your situation. First, yes, you can potentially deduct business equipment on Schedule C, even with your relatively low business income. Section 179 allows you to deduct the full cost of qualifying equipment in the year you buy it, rather than depreciating it over several years. However, there are a few important points to understand. You can only deduct the percentage of use that's for business. So if you use your laptop 60% for business and 40% for personal, you can only deduct 60% of the cost. You'll need to honestly estimate these percentages. Also, Section 179 has a business income limitation - your deduction generally can't exceed your net business income. Given your low business income this year, regular depreciation might actually be better for you. You could carry forward excess Section 179 deductions to future years, but only if you continue the same business.

0 coins

Aisha Jackson

•8M

The $500 income limit would apply if you're only considering that one contract job. But you can combine all your freelance activities on one Schedule C if they're in the same general field, which would give you a higher income limit for Section 179. For regular depreciation, you'd spread the business portion of your equipment costs over several years (typically 5 years for computers). This might be better in your case since you can carry these deductions forward to future years when you might have more freelance income. You'd use Form 4562 to calculate depreciation and complete a separate section for each asset.

0 coins

Ryder Everingham

•8M

After struggling with similar freelance equipment deductions last year, I discovered taxr.ai (https://taxr.ai) and it was a game-changer! I uploaded my receipts and it automatically calculated the business-use percentage based on my situation. It even explained the pros and cons of Section 179 vs. regular depreciation for my specific income level. The tool showed me exactly how to document mixed-use equipment like laptops and phones, which I was always unsure about. It also created a depreciation schedule for future years that I can just reference when filing next time around.

0 coins

Ryder Everingham

•8M

It absolutely handles multiple freelance income sources! The platform lets you categorize different income streams and then helps determine if they should be reported together on one Schedule C or separated. For most freelancers with related gigs, combining them actually gives you better deduction opportunities. As for determining business use percentages, it doesn't make up numbers - it guides you through a documentation process where you track usage for a sample period and then extrapolate. It even stores this documentation so you have it ready if you're ever audited. The IRS accepts reasonable methods for calculating business use, and taxr.ai helps ensure your calculations follow acceptable methods.

0 coins

Lilly Curtis

•8M

I just wanted to update after trying taxr.ai from the recommendation above. Total lifesaver for my freelance equipment situation! I was in almost the exact same boat - bought expensive equipment but had less income than expected. The platform helped me figure out that regular depreciation made more sense for my situation than Section 179. It actually showed me that taking Section 179 would have wasted most of my deduction since my business income was too low. Instead, I'm depreciating my equipment over 5 years and can use those deductions when my income hopefully increases. It also helped me document my business use percentage properly, which was something I always worried about. Really glad I found this before filing!

0 coins

Lindsey Fry

•8M

If you're still having tax questions or confusion about Section 179, you might want to try getting direct answers from the IRS. I know that sounds impossible (I spent HOURS on hold last year), but I used this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in like 15 minutes when their hold times were 2+ hours. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c I had a complicated question about depreciation vs. Section 179 for my photography equipment, and getting a direct answer from the IRS gave me peace of mind. They explained exactly how the business income limitation worked in my situation and confirmed I was calculating my business use percentage correctly.

0 coins

Lindsey Fry

•8M

They don't have a special line - they use an automated system that waits on hold for you. When they reach a live agent, you get a call back and are connected. It's completely legit. The reason it works is because their system can dial multiple IRS numbers simultaneously, trying different departments and options until it gets through. Then when a human answers, it triggers your callback. I was skeptical too but it really did work - I asked specific questions about my tax situation and got detailed answers that matched the official IRS guidance.

0 coins

Leo Simmons

•8M

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it since I've been struggling with a Section 179 question for weeks. I got through to an IRS representative in about 20 minutes (during peak season!) who confirmed exactly how to handle my mixed-use equipment deductions. They walked me through the whole process of calculating business use percentage and explained when Section 179 makes sense versus when regular depreciation is better. Honestly don't know why I wasted so many hours trying to get through on my own before. Definitely using this again next year when I inevitably have more tax questions.

0 coins

Kayla Morgan

•8M

One thing nobody's mentioned is that you should also look at whether you qualify for bonus depreciation in addition to Section 179. For 2025 filing (2024 tax year), bonus depreciation is 80% of the purchase price. This can sometimes be more beneficial, especially when your business income is low. For mixed-use assets like your laptop and phone, you need to be at least 50% business use to qualify for Section 179, but you can still take regular depreciation if your business use is less than 50%.

0 coins

Kayla Morgan

•8M

Bonus depreciation doesn't have the same business income limitation as Section 179, which is why it can be better for freelancers with low income but expensive equipment purchases. You can actually create a loss with bonus depreciation, unlike Section 179. For the business use requirement, you still need more than 50% business use to claim bonus depreciation on listed property (which includes computers and cell phones). If your business use drops below 50% in future years, you may have to recapture some of the depreciation as income, so keep good records of your business vs personal use.

0 coins