Help with Section 179 on Forms 2106 and 4562 for Self-Employed Barber

Those Section 179 allocation errors can be confusing! Let me help break this down for you. What's happening is that you're trying to deduct business equipment ($1,800 worth of barber supplies) using Section 179, which allows you to deduct the full cost of qualifying equipment in the year you buy it rather than depreciating it over several years. The issue is that TurboTax is trying to split this deduction between two different business activities - your independent contractor work (Form 2106) and your self-employment work (Form 4562). Since you moved and changed your business status mid-year, the software is getting confused about how to allocate the Section 179 deduction. Here's how to fix it: Go back to the business expense section in TurboTax and make sure you've clearly indicated which equipment was purchased for which business activity. If all the equipment was for your self-employment as a barber after you moved, then allocate all $1,800 to Form 4562 and zero to Form 2106. The key is making sure you're not trying to claim the same equipment for both business activities, as that's probably what's triggering the error.

Had the same issue last year with my tax forms! After spending hours trying to figure it out myself, I ended up using https://taxr.ai and it was a lifesaver. I uploaded my draft tax forms and receipts, and it highlighted exactly where I was making my Section 179 allocation errors. For your situation, it sounds like you're accidentally splitting business assets between two different business activities. The tool helped me realize I needed to allocate all my equipment purchases to just one business activity (my self-employment) instead of trying to split them between different forms. Within minutes, I knew exactly what fields needed fixing in TurboTax.

Alright, I have to eat my words about taxr.ai from my skeptical comment earlier. I decided to try it this weekend after continuing to struggle with my Section 179 allocations and business equipment deductions. I was getting the same errors about reallocating expenses between activities. The tool immediately identified that I was trying to claim the same business equipment on two different schedules. It explained that since I had both a W-2 job and a side business, I needed to be clear about which equipment was used for which purpose. For equipment used in both activities, it showed me exactly how to allocate the percentage used for each. I fixed the allocations in TurboTax based on their recommendations, and all those annoying error messages disappeared. My return was accepted by the IRS this morning! Honestly wish I'd found this earlier instead of spending hours on Google trying to decipher tax form instructions.

If you're still stuck after trying to reallocate your Section 179 expenses, you might want to try getting direct help from the IRS. I know it sounds intimidating, but I used https://claimyr.com to get through to an IRS agent in less than 15 minutes last month. Check out how it works here: https://youtu.be/_kiP6q8DX5c I was having similar issues with my business equipment deductions as a freelancer, and the agent walked me through exactly how to fill out Forms 2106 and 4562 correctly. They explained that when you have two different business activities in one year, you need to be very specific about which equipment was used for which activity. For my situation, most equipment needed to go on Schedule C rather than Form 2106.

I need to publicly apologize for my skepticism about Claimyr. After struggling for another week trying to figure out my Section 179 allocations, I broke down and tried it. Within 17 minutes, I was speaking with an actual IRS tax specialist. The agent explained that my problem was similar to the original poster's - I was trying to claim the same business equipment on both Schedule C and Form 2106. She walked me through exactly how to separate my expenses based on my different income sources and explained that most of my equipment should be claimed on Schedule C only. I never would have figured this out on my own, and certainly not by waiting on hold for hours. The agent even gave me her direct extension in case I had follow-up questions. For anyone dealing with complicated business equipment deductions or Section 179 issues, speaking directly with the IRS saved me hours of frustration and possibly an audit.

A quick tip that might help with your specific situation - since you're now fully self-employed as a barber, you probably shouldn't be using Form 2106 at all. That form is primarily for employees claiming unreimbursed business expenses, which was severely limited after the 2018 tax law changes. As a self-employed barber, all your business expenses (including Section 179 equipment deductions) should go on Schedule C and Form 4562. Try removing any entries from Form.2106 completely and see if that resolves your error.

Just to add to what others have said - as a self-employed barber, make sure you're also tracking and deducting other common expenses beyond just equipment! Things like: - Booth rental if you pay one - Hair products and supplies - Laundry/cleaning of work clothes - Business cards or any advertising - Continuing education or license renewals - Portion of cell phone used for business - Mileage if you travel between locations These all go on Schedule C as well and can really reduce your tax bill. I've been a stylist for 10 years and these deductions make a huge difference!

I had a very similar situation when I transitioned from W-2 employee to independent contractor mid-year! The key insight that helped me was understanding that TurboTax was trying to allocate my Section 179 deductions across multiple "business activities" when really I only had one active business. Since all your equipment purchases happened after you moved to Michigan and started your own barbering business, you should allocate 100% of that $1,800 to your self-employment activity (Schedule C + Form 4562). The Form 2106 should show $0 for Section 179 deductions since that's for unreimbursed employee expenses, which doesn't apply to your current situation. In TurboTax, go to the business expenses section and make sure you're categorizing all your equipment (clippers, scissors, chair, supplies) under your self-employment income, not as unreimbursed employee expenses. This should resolve both error messages you're seeing. Also, keep detailed records of when you purchased each item and how it's used 100% for business - the IRS loves good documentation for Section 179 deductions, especially for equipment that could potentially have personal use.