How to categorize business purchases on TurboTax - $8,200 office furniture, $1,490 laptop, $769 iPhone?

These are all business assets that need to be handled properly on your tax return. Here's how you should categorize them in TurboTax: The $8,200 office furniture should be entered as "Furniture and Equipment" in TurboTax, not as "Office Expenses." This is because furniture is considered a fixed asset with a useful life of 7 years. You'll need to depreciate this over time rather than expensing it all at once, unless you elect to use Section 179 expensing or bonus depreciation. For the $1,490 laptop and $769 iPhone, these are considered "Computer Equipment" in TurboTax. These assets typically have a 5-year depreciation period. Again, you can potentially use Section 179 or bonus depreciation to deduct them fully in the year of purchase. When you enter these in TurboTax, it will ask if you want to use Section 179. This lets you deduct the full cost in the current year if your business shows enough income to offset it. TurboTax will guide you through this process.

I was in a similar situation last year with expensive office equipment purchases. I tried figuring it out myself but kept going in circles with depreciation rules vs. Section 179. I ended up using this AI tool called taxr.ai (https://taxr.ai) that analyzes your specific situation and explains exactly how to categorize everything in TurboTax. It saved me so much time because it looked at my business income and purchase details, then showed me screenshots of exactly which TurboTax screens to use and which options to select. It even calculated whether Section 179 or regular depreciation would save me more in my specific situation. I'm not very tax-savvy so having clear instructions specifically for TurboTax was super helpful.

Just wanted to update - I tried taxr.ai after posting my skeptical question. It was actually super helpful! I entered my equipment purchases and it showed me the exact screens in TurboTax where I needed to enter them. The tool recommended I use Section 179 for my laptop and phone but depreciate my office furniture since I'll likely have more income next year when the depreciation deductions would be more valuable. It even calculated the tax difference between the options. The coolest part was it showed side-by-side comparisons of different tax scenarios so I could see exactly how much I'd save. Way better than the generic advice I was finding online. Just thought I'd share since it actually solved my problem!

If you're still having trouble with TurboTax after trying to figure out the categories, you might want to talk directly with an IRS agent to get the official answer. I spent HOURS trying to get through to the IRS last tax season for a similar business expense question, but I finally found this service called Claimyr (https://claimyr.com) that got me through to a real IRS person in under 20 minutes. They have this cool demo video showing how it works: https://youtu.be/_kiP6q8DX5c I was able to confirm exactly how to categorize some expensive equipment I bought for my business. The IRS agent walked me through which forms I needed and confirmed I was using the right depreciation method. Way better than guessing or relying on random internet advice. The peace of mind was totally worth it.

Wow, I have to eat my words. After posting my skeptical comment, I decided to try Claimyr as a last resort since I've been struggling with categorizing some expensive equipment on my taxes too. I was 100% sure it wouldn't work, but I got a call back in about 35 minutes saying they had an IRS agent on the line. The agent confirmed that for my situation, the business furniture needed to go under furniture/equipment with 7-year depreciation (or Section 179), and she explained exactly which depreciation form to use in TurboTax. She also confirmed that my computer equipment should be under the 5-year category. I'm still shocked this worked after my previous failed attempts. This is going to save me so much stress wondering if I'm doing it right. Just wanted to correct my previous comment!

One thing nobody's mentioned yet - if you're a sole proprietor filing Schedule C and your total equipment purchases for the year are under the current Section 179 threshold, you can also look at using the de minimis safe harbor election for some items. For 2025, businesses without an applicable financial statement can use this for items costing less than $2,500 each. So potentially your laptop at $1,490 and iPhone at $769 could qualify to be fully expensed this way instead of using Section 179 or depreciation. The furniture at $8,200 would still need to be depreciated or use Section 179 since it's over the threshold.

Anyone know which specific TurboTax version I need to handle business equipment like this? I'm using the Deluxe version now but wondering if I need to upgrade to handle depreciation properly.

Great question! I went through something similar last year with my consulting business. One thing I learned the hard way is to keep detailed records of the business use percentage for each item, especially for mixed-use items like your phone and laptop. For TurboTax, you'll want to create a simple spreadsheet tracking: - Purchase date and amount for each item - Business use percentage (be realistic - the IRS can audit this) - Which depreciation method you chose and why The furniture situation is interesting because at $8,200, you're getting into territory where the depreciation vs. Section 179 choice really matters. Since you mentioned this is a side gig, consider whether you expect your income to grow next year. If so, spreading the furniture depreciation over time might give you deductions when you're in a higher tax bracket. Also, don't forget about the home office deduction if you're using a dedicated space! The furniture could support that claim. TurboTax Self-Employed (which you'll need for proper business asset handling) has a good workflow for calculating this. One last tip - take photos of your setup and keep all receipts. The IRS loves documentation for business asset claims, especially for home-based businesses.