Taxes Made Simple

Michelle (Amazon book vendor) asks:

Hi Mike. I run a business reselling new and used books on Amazon.com. If I buy an extra computer and use it entirely for the business, I can deduct it under section 179 if I understand it correctly.  Is that right? Also, will that save me money on my self-employment tax, or just on regular income taxes?

Answer:

Hello, Michelle. If you use the computer entirely for your business, yes, you can deduct the computer in the year you buy it by using the Section 179 election. This will save you money on both your regular income tax and your self-employment tax. That’s the beauty of business deductions. [Note: unless the computer is kept in an office that is used exclusively for business, you will be required to keep a daily or weekly log to support your claim that you use the computer exclusively for business.]

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