Is a laptop considered a fixed asset for tax purposes? How to depreciate it correctly?

Does Section 179 apply to self-employed people too? Or only to registered businesses? Also, if I use my laptop partly for personal stuff (maybe 30% of the time), can I still claim the full amount or do I need to prorate it somehow?

Section 179 absolutely applies to self-employed individuals! As long as you're using the laptop for business purposes, you can take advantage of Section 179 deduction on your Schedule C. For mixed-use assets (business and personal), you need to prorate the deduction based on business use percentage. So if you use it 70% for business and 30% for personal, you can only deduct 70% of the cost. Make sure you keep good records of how you use the laptop to support your business use percentage in case of an audit.

Does it work for more complicated tax situations too? I have a rental property and some investments along with my business and I'm always confused about what goes where.

How do you know this isn't just giving you wrong information? I've tried other "AI tax helpers" and they told me things that my actual accountant said were completely wrong. Did you verify the advice somehow?

It definitely handles complex situations! I've used it for questions about my side gig, stock sales, and home office deductions. You can upload multiple documents and ask very specific questions about your situation. As for accuracy, I double-checked everything with the actual IRS publications to make sure it was right. The difference is it explains things in normal language and points you to the exact sections in the tax code. My accountant was actually impressed with how I organized everything based on what I learned.

How does this actually work? Does it just call the IRS for you? Couldn't I just do that myself and save the money?

Sounds like a scam to me. Nobody can get through to the IRS that fast. The wait times are notorious. They probably just connect you to some random person pretending to be an IRS agent.

It uses technology to navigate the IRS phone system and secure a place in line for you. Instead of you waiting on hold for hours, their system does it, then calls you when an actual IRS agent is about to come on the line. It's literally connecting you to the real IRS, just without the ridiculous hold time. They absolutely connect you with real IRS agents. The agents identify themselves and can access your tax records just like if you called directly. The difference is you don't waste hours of your life listening to the same hold music over and over. It's seriously the best money I've spent on tax help.

What kind of documentation did they ask for during your audit? I'm using mine almost entirely for business but occasionally check personal email or browse non-work websites. Should I be keeping a log of some kind?

They asked for receipts showing when and where I purchased the laptop, which thankfully I had saved. The bigger issue was proving business use. They wanted to see some kind of documentation showing how I was using it primarily for business. A usage log would be ideal - even a simple spreadsheet tracking business vs personal hours for a few sample weeks. They also accepted business software purchases, client emails, and invoices created on the computer as supporting evidence. Photos or screenshots showing business activity on the laptop can help too. Just make sure you're being honest about the percentage - claiming 100% business use when you actually use it for personal stuff too is a red flag.

I've used it. Section 179 gives you the full deduction now, which is usually better for cash flow. Regular depreciation spreads it out over 5 years. The main consideration is your current vs. future income. If you expect to be in a higher tax bracket in future years, regular depreciation might save you more in the long run. But most small business owners prefer the immediate write-off with Section 179.

Thanks, that makes sense! My business is growing so I might be in a higher bracket next year, but I think I'd still rather have the deduction now to offset some other unexpected income I had this year.

This is really helpful about the Section 179 income limitation! I didn't realize it couldn't create a business loss. My consulting business had a pretty good year so I should be able to take the full deduction for my laptop, but it's good to know for future purchases. Quick question about QuickBooks - when you say "set up as a fixed asset first," do you mean I should create it as an asset account and then record the purchase there instead of directly expensing it? I think I may have done this wrong initially and just coded it to "Computer Equipment" expense. Should I reverse that entry and do it properly? Also, great tip about keeping the bank statement screenshot. I learned that lesson the hard way with other business expenses!

Yes, exactly! You should create a fixed asset account in QuickBooks (like "Computer Equipment - Asset") and record the purchase there first. Then you'd create a separate depreciation expense entry that reduces the asset value over time. To fix your existing entry, you can do a journal entry to move it from the expense account to the asset account. Then if you're taking Section 179, you'd record the full depreciation in year one. If you're doing regular depreciation, you'd spread it over 5 years. The key is that the asset shows up on your balance sheet at its original cost, then gets reduced by "accumulated depreciation" each year. The annual depreciation amount is what hits your P&L as an expense. This keeps your financial statements accurate and makes tax prep much smoother. Don't worry about making the mistake initially - it's super common! The important thing is getting it set up correctly going forward.

This is such a comprehensive follow-up, thank you! I'm just starting my consulting business and was overwhelmed by all the tax implications of equipment purchases. Your point about state taxes is especially helpful - I'm in California and had no idea they might have different rules than federal. Quick question about the usage tracking - did you track actual hours spent on business vs personal tasks, or did you do it more generally like "this week was 90% business use"? I want to make sure I'm being detailed enough but not over-complicating it. Also, really appreciate the tip about saving the product specifications page. That's the kind of detail that shows you're thinking like a legitimate business owner, not just trying to write off personal purchases.