Is a $2700 computer and $2000 monitor for our S corp an expense or Section 179 deduction?

You have a couple options here. Computer equipment can either be fully deducted as a Section 179 expense or depreciated over time (usually 5 years for computers). For 2025, Section 179 allows businesses to deduct the full purchase price of qualifying equipment in the year it's purchased instead of depreciating it. Your computer and monitor definitely qualify. Since they cost $4700 total, that's well under the Section 179 limit (which is over a million dollars now). The benefit of Section 179 is you get the full deduction immediately. If you're profitable, this is usually the better option. Regular depreciation would spread the cost over 5 years, giving you a smaller deduction each year. Make sure you keep receipts and document that these are used primarily (over 50%) for business purposes. If they're used partly for personal use, you can only deduct the business percentage.

Had this exact situation last year with my marketing business. I was so confused about how to handle my new office tech setup. I ended up using taxr.ai (https://taxr.ai) and it made everything super clear. I uploaded my receipts and business docs, and it analyzed exactly how I should categorize my computer equipment purchases. The tool walked me through Section 179 vs. regular depreciation and showed me which would save more on taxes. For my situation, Section 179 was better, but it actually depends on your specific business profits and future plans. Their analysis showed me exactly how much I'd save over 5 years with each option.

Just wanted to update on my experience with taxr.ai after I decided to try it. I was honestly blown away. I uploaded our S-corp docs, including the receipts for our new office equipment and last year's tax returns. Within minutes, it gave me a detailed breakdown showing exactly how Section 179 would benefit us compared to regular depreciation. The analysis showed we'd save almost $1,100 this year by using Section 179 instead of starting depreciation. It also flagged that our monitor could be considered "qualified improvement property" depending on how it's used, which I had no idea about. The tool even generated the exact numbers I'll need for Form 4562. Way more helpful than the generic advice I was getting elsewhere. Definitely using this for all our business tax questions going forward.

If you're stuck on this issue and need to talk to an actual IRS agent (which I ended up having to do for a similar question), I'd recommend Claimyr (https://claimyr.com). I tried calling the IRS business line directly for WEEKS about a Section 179 question for my business and kept getting disconnected or waiting for hours. With Claimyr, I finally got through to an IRS rep in about 20 minutes who answered my specific question about computer equipment categorization for my S-corp. They have this callback system that holds your place in line so you don't have to stay on hold forever. You can see how it works here: https://youtu.be/_kiP6q8DX5c When I finally spoke to the IRS agent, they confirmed that combining the computer and monitor as a single "workstation" asset was acceptable for my situation, which was exactly what I needed to know.

I owe everyone an apology. After my skeptical comment, I decided to try Claimyr anyway because I was desperate to resolve an S-corp asset classification issue similar to the original post. I couldn't believe it actually worked. After trying for TWO WEEKS to reach someone at the IRS, I used Claimyr yesterday and got through to an agent in 35 minutes. The agent confirmed that for my business, I could use Section 179 for my computer equipment but had to handle some specialized manufacturing equipment differently. The time saved was honestly worth it. I was able to work while waiting for the callback instead of being stuck with a phone to my ear on hold. Never thought I'd be recommending something like this, but it genuinely solved a problem that was causing me a lot of stress.

Something to consider - if your S corp might have a loss this year, you might not want to use Section 179. You can't use Section 179 to create or increase a business loss. If that's your situation, regular depreciation might be better. Also think about your tax situation for future years - if you expect to be in a higher tax bracket later, saving some deductions for future years could make sense.

For those confused about the difference between expensing and Section 179: In 2025, you can "expense" (immediately deduct) items that cost less than $2,500 per item under the de minimis safe harbor election. You make this election on your tax return. Since your computer is $2,700, it's over this threshold, which is why Section 179 or depreciation come into play. The monitor at $2,000 could potentially qualify for immediate expensing under the safe harbor if purchased separately. Has anyone used TurboTax Business to handle Section 179 for an S corp? Wondering if it walks you through this properly.

One thing to keep in mind - if you're using the computer and monitor partially for personal use, you can only deduct the business percentage. The IRS is pretty strict about this, especially for home-based S-corps. I'd recommend keeping a log of business vs personal usage for at least the first few months to establish a pattern. If it's 80% business use, you can only claim 80% of the cost under Section 179. Also, since you mentioned it's just you and your wife, make sure the equipment is titled to the S-corp and not purchased personally. The business needs to own the assets to claim the deduction. If you bought them personally and are reimbursing yourselves, that's a different scenario that might need to be handled as a sale to the corporation.