Bookkeeping

Business expenses on personal account

I withdrew money from my IRA to be 25% partner in a new business and from that money I purchased office supplies, furniture and computer equipment and other start up items. I did not give the cash to the business account prior to making the purchases. I am using HR block premium/business software to do my personal return – can I use any of these expenses on my return?

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Answer

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    This answer is edited.

    You can deduct them as business expenses only if you have accurate records of receipts and proof the equipment and office supplies is being used for business purposes only.  Equipment should be deducted as Fixed Assets over the useful life of the equipment.

    Office Supplies: Regarding itemization of document printing, you can itemize the office supplies paper, ink, pens, receipts, staplers, staples, USB thumb drives, paper clips, etc.

     

    Office Equipment: As a business owner, you can itemized office equipment such as the computer and the printer (as Computer Hardware fixed assets depreciated over the useful life of the equipment see IRS MACRS table for more info), low cost office furniture (less than $2500 depreciated over time under ‘Furniture & Equipment’), or software like QuickBooks, Microsoft subscriptions for business use (depreciated over useful life as ‘Computer Software’). Postage and shipping supplies should be tracked with detail is also an allowable item to be itemized.

     

    You may deduct 100% of the cost of office supplies and materials, postage and stamp charges used during the year.  Office equipment (used more than 1 year costing more than $500) can be depreciated by dividing the total cost of the equipment (asset) over a useful life period whereby each tax year you can deduct the depreciation amount until the total amount has been claimed.

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