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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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I work at an auto salvage yard. I am considered an ...

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I work at an auto salvage yard. I am considered an employee, but am paid a flat amount for each car I dismantle. $75 per car. I am required to supply my own tools (which I can''t do my job without) and when the tools break I have to buy replacements. Are there any circumstances underwhich the cost of tools can be a deduction for federal income tax purposes?   Many thanks for your opinion.
Submitted: 9 years ago.
Category: Tax
Expert:  RD replied 9 years ago.

Are you running this activity as a sole proprietor? If yes, than you can claim the ordinary and necessary expenses incurred in carrying on this activity on Sch C and so the cost of tools and other incidental expense will be deducted for tax purposes.

 

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

Customer: replied 9 years ago.
Reply to Renu V's Post: As indicated, I am considered an employee and as an employee who is required to supply their own tools, are there any circumstances under which those tools be treated as a deduction -- i.e. replacing broken one etc.
Expert:  RD replied 9 years ago.

Yes, you can claim those expenses as unreimbursed employee business expense.

Since you are personally buying it and if it is required for your employment - unreimbursed necessary business expenses than you can claim this as an employee business expense if you itemize on Sch A. Note that you will file Form 2106 listing the expenses and these expenses will be subject to 2% AGI limit. This means that the total of these expenses over 2% of your Adjusted gross income will be deductible as part of the itemized deductions.

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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