Does anyone write off their tools for taxes?

[FunkyfullWidth]

I was looking into writing off my tools last year on my taxes. I had spent about 5 grand on the truck, and other money for various napa/other tools. I don't have a mortgage or really any other expenses that can be considered deductable.

Last year I put my tool purchases into the turbotax calculator and I didn't get any money back until I hit like 7500 bucks... So I didn't include it.

But, with the purchase of my first house coming to a close I may be able to add my tool purchases for the year to my deductions. Does anyone else do this? I also wasn't sure how to add the receipts. I've kept every single snap on, sears, napa, harbor freight, and miscellaneous tool expense for the last however many years.

I've been unsure on how to actually add everything up though. If you have a floating truck account, do you write the values for the receipt at time of receiving the tool, or the paid balance. Is it necessary to actually log each tool individually, each receipt individually, or can you just add up the total tool costs for the year and if you get an audit, show them all the receipts.

 

[chewy7]

i wrote quite a bit off for 2011 you should keep the receipts

 

[metaldad]

Total yearly tool expenditures. Keep the receipts.

 

[otis66]

Yes. I give every tool reciept to my accountant. Also gloves jackets, boots. What ever I need/use on the job.

 

[mikefromme]

I save the receipts but only hand the accountant a yearly summary with the totals.

Get tax accountant they will save you more than they charge. And the advice on what you can/can't/could do is priceless.

 

[JASTECH]

Also milage to/from work, repairs, cell phone bill ect. And your alowed so much a year for lunch.

 

[Charles (in GA)]

I have a friend who does taxes, he gets shoe boxes full of receipts from people for medical expenses, work tools and other "deductible" items. He sifts thru them (sometimes) and rarely does he find enough to actually deduct, but his clients go home and tell everyone that they "deduct" all this stuff from their taxes.

The information is easily found in the Instructions for Schedule A (page A-9) and simply tells you "You can deduct only the part of these expenses that exceeds 2% of the amount on Form 1040, line 38. Pub. 529 discusses the types of expenses that can and cannot be deducted."

The first catch is the "exceeds 2% of Line 38" which is your Adjusted Gross Income. If your AGI is say, $30,000 then you would have to spend more than $600 and then you could only deduct that portion of the total "2% deductions list" that EXCEED the $600.

The second catch is in IRS Publication 529, on page 3, Unreimbursed Employee Expenses, you find "Tools and supplies used in your work." and on page 6 you find a paragraph explaining that "Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. You can depreciate the cost of tools that have a useful life substantially beyond the tax year. For more information about depreciation, see Publication 946."

Depreciation adds another complexity to your taxes. While some tax preparers will throw in anything and say "you will never get audited" most will not, and if you hand them a pile of receipts, they may or may not attempt to determine what is deductible and what is not.

Basically, according to the tax rules, you generally cannot deduct hard tools, you would have to depreciate them over a period of years, using the IRS's depreciation rules. This deduction is designed to cover un-paid uniforms, gloves, certain protective and safety gear that is not long lived.

I am not a tax preparer, nor am I a tax expert. You really don't need to be to read the rules. They are easy to find in the instructions for the tax forms. Personally, I almost never buy a tool for my work, what I have, I've had for years and simply don't need to replace or add to my work tools.

As they say, YMMV.

Charles

 

[UncleJoe]

Go see a CPA. I file a Schedule C because I run a business that uses tools. Your situation may be different. I would not take out my own appendix I would hire a doctor. Tax advice needs to come from a CPA or Tax expert. Having said that, once the CPA set me on the right course with the schedule C setup I then did all my taxes on Turbo Tax. Just answer the questions and you are done. Keep receipts. If something changes I would not hesitate to go back to the CPA for advice.

 

[Charles (in GA)]

I've been unsure on how to actually add everything up though. If you have a floating truck account, do you write the values for the receipt at time of receiving the tool, or the paid balance. Is it necessary to actually log each tool individually, each receipt individually, or can you just add up the total tool costs for the year and if you get an audit, show them all the receipts.

From what I've seen, the IRS expects you to actually have spent the money during the year. If it isn't paid for on December 31, its not an expense for that year. Its the way the IRS handles virtually everything like that.

Again, I'm not an expert, but in everything I've ever looked at that involves payment of anything that might run past the first of the year, the IRS says its deductible in the year in which it was actually paid.

Charles

 

[HoosierBuddy]

Go see a CPA. I file a Schedule C because I run a business that uses tools. Your situation may be different. I would not take out my own appendix I would hire a doctor. Tax advice needs to come from a CPA or Tax expert. Having said that, once the CPA set me on the right course with the schedule C setup I then did all my taxes on Turbo Tax. Just answer the questions and you are done. Keep receipts. If something changes I would not hesitate to go back to the CPA for advice.

This is a good point.

If you are a business, tools should be able to be expensed or depreciated, offsetting your business income.

Phil

 

[bobcatdan]

My personal experince is I never spend enough for it ever matter. That said, if you spent 10,000 one year, you'd be foolish not to at least try.

 

[Coach James]

Also milage to/from work, repairs, cell phone bill ect. And your alowed so much a year for lunch.

If it's a personal vehicle being driven to work and home each day, how do you deduct mileage? I am only able to deduct mileage for business trips or trips from the workplace to vendor X then back to the workplace if I use my personal vehicle.

Coach

 

[TheGrooveking]

The IRS works on cash in / cash out basis.

TheGrooveking

 

[gonefirefighting]

I dont pay taxes

 

[Ken81590]

If you work as a mechanic and keep all your receipts you can write them off. Even boots and dickies

 

[camarotoolman]

Has alot to do if you are a business, self employer or working for somebody.

 

[thejudges69]

i do, but i'm self employeed owner operator and there a requirement for me to maintain my equipment.

 

[FunkyfullWidth]

That's it exacly. I'm employed as a mechanic and I save all my receipts for everything I buy that's needed for my job. Uniforms, boots, tools. turbo tax (I felt) had very good explanations about the rules of things, but not on how to do it. I wasn't sure if each receipt or tool had to be itemized, or if you could just throw your grand total on there. For this year I might talk to a tax guy, but it just seemed too easy to do on my own an hour here and there.

 

[Dumber than lumber]

Re: local bookkeeping services

how did you solve the issue of taxes?

Taxes?? What’s taxes?
Seriously though, tax law that passed in 2017 made big changes to this area.
If you are an employee your employer needs to put in or have a tool reimbursement plan. It is a type of IRS approved arrangement where money gets deducted from a paycheck. A little like a health reimbursement account.
If you have your own business this is time of year to buy tools and equipment that you will need soon.
Buy now, save in April.

 

[bcschief]

If it's a personal vehicle being driven to work and home each day, how do you deduct mileage? I am only able to deduct mileage for business trips or trips from the workplace to vendor X then back to the workplace if I use my personal vehicle.

Coach

Simple answer you can't if you work a 2nd job you can deduct mileage from job 1 to job 2 . Yea tool deductions over 2% AGI on schedule A. Business expense is a whole different category. It is very hard to break the standard deduction on a 1040 today. And tax preparers that tell you they can are setting you up for an audit.

 

[bcschief]

I dont pay taxes

I wouldn't let that out

 

[demarpaint]

If they're used for business, or for me to service a vehicle I use for business, yes, and I save the receipts.

 

[In The Doghouse]

I think any deductions have to be money spent during the year of the tax report. And with present basic deductions it's unlikely you'll claim enough to make a difference.

 

[ssdave]

.....

 

[bobg03]

The laws have seriously changed with the new tax laws, I would consult with a tax guy and certainly not one from HR Block or Jackson Hewett.

I have a guy who specializes in Rail Road taxes and my normal cost is $125 + $25 each for any extra forms...It's hard to hit anything needed now.

For reference one of my sons went to HR Block for an 1040EZ they wanted $250..WTF

 

[SamuraiJack]

There are so many tax rules and exceptions that working with a CPA that specializes in taxes is about the only way to go. Being classified as self employed adds 15% in SS and medicare on your profits plus income taxes. Being classified as an employee will make work expenses harder to deduct especially in a two income house. Doing work as a side gig would means both, and any side work for a company over $600 will mean your receiving a 1099 that will force your hand when it comes to tax filing.

Then on top of that there are things like hobby loss rules and state/local/sales taxes.

The best chance you have for deducting your tools as an employee is to find a good tax person, understand your specific situation and go make some money. A good CPA is not going to be cheap and expect to pay at least $100hr or barter with your tax person services for services.

 

[Ign]

Re: local bookkeeping services

Taxes?? What’s taxes?
Seriously though, tax law that passed in 2017 made big changes to this area.
If you are an employee your employer needs to put in or have a tool reimbursement plan. It is a type of IRS approved arrangement where money gets deducted from a paycheck. A little like a health reimbursement account.
If you have your own business this is time of year to buy tools and equipment that you will need soon.
Buy now, save in April.

Holy revival from 2012? What prompted this thread to even come across your radar?

 

[u2slow]

IMHO, the only way you win with tools for work, is not having to buy your own. I had that clarity from my first automotive job in my 20's.

Back when I did run my own business... if I needed a specialty tool for a job, I bought together with the material, and got costed to the job with material. That way I didn't care if I break, lose, or 'threw the tool away' when the year is up. The regime of amortizing tools and assets over years - for a 1-man/1-van operation is ridiculous.

Those days are over. Employer buys all the tools we need at work. I have my own tools at home (no write-offs).

 

[logical]

You don't need to be a business to deduct expenses such as tools but between the fairly high standard deductions in place today and specific thresholds that have to also be met...it is unlikely that you will qualify to "write off" your tools.

Unless you have a particularly complicated financial life, TurboTax will sort things out as well as most tax preparers. About the only way to deduct tools (or large charitable donations for that matter) is to bundle them into a single year.

You will still hear people talk about "writing off" mortgage interest. Those people either have way to much debt or have no idea what current tax laws allow.

Sent from my garage.

 

[Firebrick43]

You don't need to be a business to deduct expenses such as tools but between the fairly high standard deductions in place today and specific thresholds that have to also be met...it is unlikely that you will qualify to "write off" your tools.

Unless you have a particularly complicated financial life, TurboTax will sort things out as well as most tax preparers. About the only way to deduct tools (or large charitable donations for that matter) is to bundle them into a single year.

You will still hear people talk about "writing off" mortgage interest. Those people either have way to much debt or have no idea what current tax laws allow.

Sent from my garage.

You are not kidding. I had a a very intelligent coworker(otherwise) tell me that he only had 10k left on his mortgage and and his payments were only 250$. This coworker had saved and was doing well, and approaching retirement so I mentioned “it would be nice to have no mortgage after this year!” And was quite surprised that he wasn’t planning on it??? He could deduct his mortgage off his taxes then. I could not convince him that he could only deduct interest and it wasn’t a $ for $ deduction even after reading him parts of the tax law

 

[Copymutt]

Two edged sword. If you deduct them as a business expense then you will owe business property tax every year.

 

[Miss the Pontiacs]

My accountant says any tools under $100 are basically a total write off. Anything over can be deprecated. This is for my company not as an individual. I keep the receipts and give him a total at tax time.