Using De Minimis Safe Harbor for Gig Workers - Claiming Tangible Property Under $2500 Without Depreciation

Do you need separate documentation proving the business use percentage? Like, do I need to keep a log of every time I use my computer for work vs not-work? That seems excessive but I don't want to get flagged.

You don't need an hour-by-hour log, but having some reasonable basis for your business use percentage is important. A simple journal noting your work patterns over a typical week is sufficient - for example, "I typically work on client projects Monday and Wednesday evenings for 4 hours each, plus approximately 3 hours each weekend, totaling about 11 hours of business use per week out of my typical 40 hours of computer use." If you're audited, the IRS is looking for a reasonable method to determine your business use, not necessarily a minute-by-minute tracking system. Just make sure the percentage you claim reasonably reflects your actual usage.

Does it really tell you what percentage you can claim? That seems like it would be personal to each person's situation? Is there some formula it uses based on hours or something?

I'm curious how this works with things like cell phones or internet service...does the tool handle ongoing expenses too or just one-time purchases like laptops?

The tool doesn't dictate what percentage you can claim - it asks you to input your honest assessment of business vs. personal use, then helps you document that properly. It's ultimately up to you to determine that percentage based on your actual usage patterns. For ongoing expenses like cell phones and internet, the tool actually does address those too. It helps you separate the business portion of these expenses and explains that these are handled differently from tangible property under De Minimis. These are just regular business expenses where you can deduct the business use percentage without needing the De Minimis election statement.

How does this actually work? Like are they just calling for you or do they have some special connection to the IRS? Seems too good to be true after my experiences with the IRS phone system.

Yeah right. No way this works. The IRS is deliberately understaffed and there's no magic button to get through. Sounds like you're trying to sell something. Next you'll be telling us about extended car warranties.

They use a system that continuously redials and navigates the IRS phone tree until they secure a spot in the queue, then they call you and connect you directly with the agent. You're still talking to the official IRS representatives - Claimyr just handles the painful waiting and navigation part. I totally get the skepticism - I felt the same way! But when you've been trying to reach someone for weeks with no luck, it's worth a shot. The IRS is actually properly staffed in many departments now, but their phone system is still from the stone age. And no, I don't work for them or get anything for mentioning this - just sharing what helped me resolve my tax issue.

Yes, you can deduct the business portion ($720) in the year you bought it using De Minimis Safe Harbor, but you MUST include a statement with your return saying you're electing to use it. Without the statement, the IRS defaults to requiring depreciation. TurboTax should have an option to attach a statement/document to your return. The statement needs to say something like: "For the tax year ending December 31, 2024, I am electing the De Minimis Safe Harbor under Reg. 1.263(a)-1(f) for my business equipment purchases under $2,500." Then list your phone, its total cost, business use percentage, and the amount you're deducting.

Thanks for the clear explanation! I totally missed the part about needing a separate statement - I was just going to put it in as an expense. I'll look for that attachment option in TurboTax. Do you know if I can still apply this to equipment I bought earlier in the year, or is there some deadline for deciding to use this Safe Harbor thing?

You can absolutely apply this to equipment purchased anytime during the tax year - there's no special deadline for deciding to use the De Minimis Safe Harbor other than making the election when you file your return. The election applies to all qualifying purchases for that tax year. Just make sure the statement is included when you file - this is a common oversight that causes problems later. If you're using TurboTax, look under the "Miscellaneous Forms" or "Other Forms" section for a way to attach a PDF statement.

Software subscriptions don't need the De Minimis Safe Harbor election - they're already fully deductible as regular business expenses in the year you pay for them (assuming they're for business use). The De Minimis rule is specifically for tangible property (physical items) that would otherwise need to be capitalized and depreciated. So you can just deduct the business portion of your Adobe subscription directly on Schedule C without any special election or statement. If you use it 100% for business, deduct the full amount.

Oh that's good to know! I was making this way more complicated than it needed to be. So basically I just put the subscription cost under regular business expenses and only need to worry about the De Minimis election for things like computers, cameras, and other physical equipment?