If you break an employment contract, you can deduct damages you pay your former employer if the damages are attributable to the pay you received from that employer.

Depreciation on Computers

You can claim a depreciation deduction for a computer that you use in your work as an employee if its use is:

  • For the convenience of your employer, and
  • Required as a condition of your employment.

For tax years beginning after 2009, cellular telephones and similar telecommunications equipment have been removed from the definition of listed property.

For the convenience of your employer.   This means that your use of the computer is for a substantial business reason of your employer. You must consider all facts in making this determination. Use of your computer during your regular working hours to carry on your employer’s business is generally for the convenience of your employer.

Required as a condition of your employment.  This means that you cannot properly perform your duties without the computer. Whether you can properly perform your duties without it depends on all the facts and circumstances. It is not necessary that your employer explicitly requires you to use your computer. But neither is it enough that your employer merely states that your use of the item is a condition of your employment.

Example.

You are an engineer with an engineering firm. You occasionally take work home at night rather than work late at the office. You own and use a computer that is similar to the one you use at the office to complete your work at home. Since your use of the computer is not for the convenience of your employer and is not required as a condition of your employment, you cannot claim a depreciation deduction for it.

Which depreciation method to use.   The depreciation method you use depends on whether you meet the more-than-50%-use test.

More-than-50%-use test met.   You meet this test if you use the computer more than 50% in your work. If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). In addition, you may be able to take the section 179 deduction for the year you place the item in service.

More-than-50%-use test not met.   If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System (ADS). You also cannot claim the section 179 deduction. (But if you use your computer in a home office, see the exception below.)

Investment use.   Your use of a computer in connection with investments (described later under Other Expenses) does not count as use in your work. However, you can combine your investment use with your work use in figuring your depreciation deduction.

Exception for computer used in a home office.   The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office. You can claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work. You also may be able to take a section 179 deduction for the year you place the computer in service. See Computer used in a home office under How To Report, later.

Depreciation on Computers

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