Writing off Work Related Items

[G00SE]

Hey everyone
I know theres a huge thread about this, but it didnt answer the questions I had. For starters im a w2, so dont start the whole 1099 mumbo.

1.) When I do my taxes, how do i go about writing off my work related items.

2.) Do I have to meet a certain income to write my work items off

3.) If I literally spend half my yearly income, do I get it all back?

4.) When you write of work items, do you get all your money back or a set percentage?

5.) Can you please explain the "Depreciated Items" Thing

I bought a snap on tool box, will I not get my money back when I do taxes?

Thanks guys, I appreciate your knowledgeable replies
Ive been a "backyard" mechanic for a long time, but am now a heavy duty diesel mechanic

 

[garfunkle24]

I don't know US specifics, but when you buy something you can write off, you only get to deduct the claimed amount from your income, you don't get the whole purchase cost back...

The depreciation is to account for the loss of value over time of certain, generally higher priced items. Maybe a toolbox, high end code scanner etc...

 

[G00SE]

Also, I heard that you have to spend a certain amount to write work related items off.

And if you dont reach that amount, then its better to take the regular refund.

If thats the case, what is the set amount or does it go off your yearly income?

 

[Lotek]

If you are unsure about it, have a cpa do your taxes, bring all the receipts and have him figure it out. Better to spend a little on a pro than a lot in penalties. Or have him do them one year so you see how it is done, then give it a shot.

 

[domain]

When I had my taxes done professionally I brought all my expenses that were work related form the past year. I was told I had to itemize my deductions, have over 5k in purchases, then any amount over 5k would be subracted to my TAXABLE income....

 

[logical]

Tools and other expenses to do your job are deductable even if you are someone's employee, however:

Deductions are an amount subtracted from your income before you calculate how much tax you owe. You don't "get it all back"... that's called a "tax credit" and is rarely a 100% refund of an expense... "tax credits" are a whole different animal. Stop and think for a second...why would you think you can buy a giant tool box and have the government (taxpayers) pay for it???????

Naturally you have to itemize to deduct work related items and all your deductions including mortgage interest, charitable donations, property taxes and such would need to add up to be enough to exceed the standard deduction. The standard deduction is a set amount you can deduct "no questions asked" and is currently about $5700 for a single non-blind person under 65. Otherwise, you just subtract the standard deduction from your income before calculating the tax. You itemize when you can say "the total of all my actual deductions, after all the limits/minimums/rules are applied, is still more than the standard deduction would be".

Tools you need for work are considered "unreimbursed employee expenses" and are part of a group of deductions that must first exceed 2% of your adjusted gross income (AGI) before you start counting. Say you make $50K and have an AGI of $40k, you'd have to first spend $800 that would be non-deductable and then deduct only the amount over $800.

Tools and supplies are only fully deductable in the same year you buy them if they are used up or worn out and thrown away within one year. Stuff that lasts longer must be depreciated (a fancy way of deducting the cost over several years or the life of the tools).

Work clothes are deductable but only if they are specifically required by the employer AND are the type not suitable for normal use outside work.

You can also include the cost of professional group dues or licensing fees.

There are other rules for education expenses.

You really just need to see a tax pro or at least use one of the tax software packages to see if you can or should be deducting work related expenses. The 2% rule is what kills this for most people. Before that rule existed everybody that bought a pack of a dozen pencils was deducting buiness expenses.

 

[theoldwizard1]

First, I am not an account or a tax expert, just a guy who has been doing his own taxes for over 40 years.

All of your questions are secondary to the first question. My responses are assuming that you are NOT working for yourself and you are NOT a "contractor". That is you get a regular paycheck, with taxes taken out, from the company that you work for.

1.) When I do my taxes, how do i go about writing off my work related items.

Worked related expenses (tools, uniforms, consumables, etc) are deducted on Schedule A, Itemized Deductions. There are 7 sections to Schedule A, only one of which applies to Job Expenses. Very few people "itemize deduction" (that is, fill out Schedule A) because the government gives out very generous "standard deductions".

First, you can "deduct only the part of these expenses that exceeds 2%" of your income. I can see no limit on what you can deduct, but you must list each item separately and you DARN WELL BETTER HAVE A RECEIPT FOR EACH ITEM IF YOU WANT TO STAY OUT OF JAIL ! Of course all purchase must been done during that tax year and, if you are a new hire, after you started working.

2.) Do I have to meet a certain income to write my work items off

No, but you have to exceed the "standard deduction". For 2011 the standard deduction is $5,800 for a single tax filer and $11,600 for married filing jointly.

3.) If I literally spend half my yearly income, do I get it all back?

No. Your gross income is reduced by that amount. If you made $10,000 and spent $5,000 on tools, you would be taxed on $5,200. (Remember that 2% I mentioned earlier.)

4.) When you write of(f) work items, do you get all your money back or a set percentage?

See previous explanation.

5.) Can you please explain the "Depreciated Items" Thing

Now you are starting to exceed my knowledge. The rules for Schedule A say you can deduct "small tools". "Small" is debatable and here you need to consult some one else.

When you buy large "durable" items (things designed to last many years; yes, a screwdriver should last many years, but it is small. A 3/4" impact or a large SnapOn tool box ... I don't) you are only allowed to deduct a percentage of that item each year you own it (say, maybe 10% per year for 10 years). Here. you need expert advice, no just the next mechanic over. He may have been cheating on his taxes for the past 10 years !

The IRS does have an 800 phone number and now that tax season is over, you might want to give them a call.

Any money spent on tax assistance (including software like Turbo Tax) is also deductible.

 

[diggerrick]

Quoted from IRS Publication 535 "Business Expenses": (not sure how it applies to the OP)

"Tools. Unless the uniform capitalization rules apply, amounts spent for tools used in your business are deductible expenses if the tools have a life expectancy of less than 1 year or their cost is minor."

Those last few words have always been kinda vague to me.

I would definitelty recommend a professional do your taxes if you're considering these types of deductions. The big bill is tough, but the amount ours has saved us has outweighed that. Plus I get some peace of mind that she's only had to attend 3 audits in 27 years and 2 went fine (the other was a businessman trying to hide money and provided her with false information - I asked about audits a long time ago).

 

[dwilliams35]

Fortunately, the company I work for has a "tool deduction program": buy tools you need for work, the company buys them then takes them out of your check: the real pertinent part here is that you've got a tool expense line-item on your paystub: makes it pretty easy come tax time..

 

[G00SE]

Thank you guys, for the help.
Very informative.
-G00SE

 

[ZRX61]

Fortunately, the company I work for has a "tool deduction program": buy tools you need for work, the company buys them then takes them out of your check: the real pertinent part here is that you've got a tool expense line-item on your paystub: makes it pretty easy come tax time..

Some companies list part of your wages as "tool allowance" instead of actual wages & that isn't taxable... When I was a motorcycle despatch rider in the UK we got paid by the mile & it wasn't unknown for some companies to pay 80% of your income as "vehicle expenses" which is what is known as a loophole as that wasn't taxable 30 years ago

Also:
If you buy any books/manuals for work etc that comes under "education" & is deductable, Ditto any costs associated with taking classes etc (obviously)

Even that box of bandaids in your toolbox is a deductable medical expense if you want to get carried away

 

[dtt454]

just fyi, there is a number of organizations floating around out there that say they can get all your tool expenses tax free, by diverting some of your money to them, then they take a fee out and send you a check back tax free, they are real businesses, im not a tax expert or a law expert, but the company i work for (a decent sized company) offered it to all us employees, and figuring surely they checked it out i signed up (like most of the employees did) not to say anyone was running a scam, you was only supposed to claim what you actually paid in tools and was supposed to keep recipts, but EVERY one of us got letters from the irs the next year, wanting to see our recipts. the company finally stepped up and resolved it (after unspecifided fines were paid i hear) i dont know every detail, this was a few years back, i dont know if those places are still around.

but just fyi