I receive both W2 and 1099 income, with majority coming from W2. I have recently purchased a new iPhone to be used with the business associated with the 1099, my W2 employer provides me with a cellphone for that job.
The iPhone cost $199 with a 2 year contract, though the cost of the phone is $599 ($400 deferred contract savings). I was taxed on the $599 amount.
I want to count the iPhone as an expense against my business. Can I use $599? or can I use $199, plus whatever the cost to early terminate is and the subsidy fee replacement?
Thanks
Message edited by: premio158 on 2009-11-01 12:01:06 CST
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If you haven't paid $599, why exactly do you think you can claim an expense for $599? Why do you think you can include an early termination fee if you haven't paid an early termination fee.
Also, you should know how to document the biz/personal use ratio that you are using, and factor that in as well.
Message edited by: VerbalK on 2009-11-01 13:02:54 CST
VerbalK said:If you haven't paid $599, why exactly do you think you can claim an expense for $599? Why do you think you can include an early termination fee if you haven't paid an early termination fee.
Also, you should know how to document the biz/personal use ratio that you are using, and factor that in as well.
Hmm..
Biz/personal will be 100/0 to 95/5, as this will be a second phone.
I started to think about the $599 as the price of the phone, when I was charged tax on that amount. If the government considers the cost to be $599, shouldn't that carry over to deductions on taxes? I could sell the phone for $599 on eBay.
You can only deduct actual expenses you can show on a reciept. I buy phones regularly for my work and always bill them at the cost I paid. I usually do not write off cell usage. (I am in the cellular field so they are work tools)
My current contract requires me to provide a cell, and pay for airtime so I may reconsider this year.
If I was running a business I would have a separate cell phone for that. (protip: you can call forward a basic personal handset to your work phone and have separate numbers and still be able to split them back when the job is over -- you have to carry one handset that way)
premio158 said:[If the government considers the cost to be $599, shouldn't that carry over to deductions on taxes? I could sell the phone for $599 on eBay.
The federal government is not bound by the determination of a state government regarding sales tax value. And in some states, you pay tax on the after-contract (subsidized) value.
Yeah go ahead... consider the phone to cost $599 and then consider the $400 deferred contract savings as business income... and then by the wonderful powers of math... the phone cost what you paid for it. It's not that hard a concept... in 2009 you paid how much in order to use a phone for your business (yes, you can expense your monthly bill as well)... then, tada.. that's what you claim. Stop being a dishonest tax dodging weasel.
VerbalK said:Stop being a dishonest tax dodging weasel.
WoW!
For everyone else, thanks for the info. I normally don't deduct any expenses for the 1099 since I'm mostly lazy about it. This year I figured I'd try and itemize and figure out what is legitimate, FW is inspiring me to be frugal. I was confused on this one, as I would have an asset valued at $600, with an expense of $200 that incurred a liability of $400 for contract/ETF. With California tax charging on the full amount, I thought I'd ask, and appreciate the advice.
I don't know if I want to write off the service fee though, since its line #2 now on a familytalk line, with my wife having the other for personal.
Redwolf01: I like the way you're thinking, I just got signed into the Google, so now I can hand out a google number that calls all lines for me.
For everyone else, thanks for the info. I normally don't deduct any expenses for the 1099 since I'm mostly lazy about it. This year I figured I'd try and itemize and figure out what is legitimate, FW is inspiring me to be frugal. I was confused on this one, as I would have an asset valued at $600, with an expense of $200 that incurred a liability of $400 for contract/ETF. With California tax charging on the full amount, I thought I'd ask, and appreciate the advice.Looks like you have things categorized correctly so I don't know where the confusion would be. You are not making a balance sheet so assets and liabilities should not matter.
Message edited by: anthonyu on 2009-11-01 23:56:10 CST
Okay... now stop being a Over-paying tax weasel. If you have a service fee for two lines, and one is personal, one is business, look through a sampling of two or three bills and calculate a ratio of biz/personal use (ie count the emails and minutes sent/rec'd from wife's line, and then your line), and apply that ratio to all your bills. It's not that difficult.
You don't owe taxes on accounts receivable... and you don't get to deduct expense for future liabilites until you actually pay for them.
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