Can I Claim a New Computer as a Job Expense If I'm Unemployed?
You cannot claim a new computer as a job expense if you don't have a job. However, if the equipment serves a purpose to manage income-related responsibilities, you might be eligible for certain deductions. The Internal Revenue Service has specific guidelines regarding tax deductions related to income, education and employment-seeking expenses; in certain situations, the cost of a new computer is eligible for a tax deduction.
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Business Education
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According to the Poznak Law Firm Ltd., most of the time education expenses are not tax-deductible and you cannot claim the expense of a new computer as an education cost. However, even if you are unemployed, you might be able to claim a deduction for a computer if its use is to complete an educational requirement for employment. For instance, if you are enrolled in an online licensing or certification course needed to gain employment your purchase may be eligible for deduction. If your occupation requires continued education to maintain and improve skill qualifications, you may also qualify to take such deductions.
Income Production
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Whether you are employed or not, personal computers are tax-deductible when they are used in association with personal investments and other purposes for producing taxable income. For instance, if you own rental properties that produce revenue, but real estate is not your principal business, you may claim a new computer that is used primarily for property management responsibilities. If you need a new computer to manage stocks, bonds and investments that produce income, you may also claim a deduction. In either scenario, you may claim the deduction only if the expense of your computer exceeds 2 percent of your adjusted gross income.
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Employment Seeking
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Depending your level of previous income and individual circumstances, you may be able to claim a new computer purchase as a "miscellaneous deduction" if you bought primarily to search for employment. According to the Internal Revenue Service, expenses related to a job search must exceed 2 percent of your adjusted gross income for the corresponding tax year. If you paid by credit card or financed the equipment, you may also deduct the finance fees and interest charges.
How Much You Can Deduct
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Typically, you cannot deduct the entire cost of the computer -- the actual percentage of your expense eligible for deduction depends on individual circumstances. Once the amount of your deduction is established, you may then still only deduct one-sixth of that amount per year, every year, as the equipment depreciates. In some instances you may be able to claim the full deduction sooner if the unit becomes obsolete in less than six years.
The amount of your deduction depends entirely on what percent of time the computer is used for business, investment or employment seeking purposes. For instance, if your new computer use comprises 15 percent recreation and hobby, 45 percent employment searching, 20 percent investment management and 20 percent continued education, you can claim 85 percent of its cost as a deductible. All uses but those for recreation and hobby are eligible for deduction.
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