Apple Watch eligible as a tax write-off? (US)

[c.s.]

For anyone who has their own business or does contract work, we've always been able to deduct iPhones and accessories (charging cables, etc.). I'm wondering if Apple Watch counts as an accessory, from a legal standpoint. That's how Apple is going to list it in their earnings report. It's just an expensive accessory that extends the function of the phone. Any issues with that?
Just looking for one more excuse to purchase one.

 

[extricated]

Tim Cook "can't live without it".
If it's that integral to your life (and work), I'd say go for it!

* I am not a tax-professional and am not liable for any potential jail time you may serve for using my suggestion.

 

[bbeagle]

For anyone who has their own business or does contract work, we've always been able to deduct iPhones and accessories (charging cables, etc.). I'm wondering if Apple Watch counts as an accessory, from a legal standpoint.

If the Apple Watch is integral to your business, then yes, it will be a tax deduction. You need to PROVE this, if questioned.

For example, if your iPhone is necessary for text messages, phone calls for your work - because you're outside your home, then the iPhone can be deducted. If the watch does nothing more but 'mirror' what your iPhone does in a convenient way, it can't be deducted. But if the watch does more and allows you to phone call when you couldn't otherwise, you can deduct it - but be prepared to PROVE it.

If you're an Apple Watch developer? Then, yes, the Watch can be deducted from the money you make developing Watch apps. Or even deducted from your business income if you make internal apps.

 

[Itsedstech]

Im always on call for work and have no phone home, i also dont get signal on my phone in the production floor but in the back of the builidng i do, if the watches range is what they say it is, then i could leave my phone in the back and takes calls on the floor. tax write off here we come

 

[Glene]

If the Apple Watch is integral to your business, then yes, it will be a tax deduction. You need to PROVE this, if questioned.

went thru this with a few other devices and my accountant looked into this with the IRS. Correct, if you can prove you use it in your biz, then you got a shot.

He is willing to let me write it off as I do training, and will use the watch in presentations and the ability to get emails on the fly...

but he admits it may be thrown out anyway if they get really into looking at the return....

 

[bbeagle]

went thru this with a few other devices and my accountant looked into this with the IRS.

What your accountant / tax preparer says has nothing to do with the actual legality.

ANYTHING that is integral and reasonable to your business can be deducted. If you NEED to go to strip clubs or play video games as part of your job, then it can be deducted.

There is a lot of grey area. Like, you might need to know the time to do your job, but buying a $20,000 Rolex watch just to know the time is not 'reasonable'.

Put simply, if you can easily explain to the IRS the real reason the watch is integral to your business, and you also can show that it's not a luxury - like a $29 watch couldn't do the same thing, then it can be deducted. Like, a judge would be okay with an Apple Sport or Apple Watch, but an Edition would be looked at suspiciously and not allowed.

 

[Technodynamic]

I bet you can easily write it off. Your justification just has to be simple and true(isn):

Write offs:

internet access - needed for conduction of business via email and for website updates
iphone - used for mobile communications, email, texting and other apps used for business
Apple watch - used for notifications of most important business communications and rapid response.

Boom... write off

 

[meldea]

Aside from the Watch being necessary to the operation of your business, the other part of the question is what's a fair value? Just because a Watch serves a necessary business purpose, doesn't necessarily mean you can write off the full price of a $1000 stainless steel link (if that's what you are planning to buy). However, I don't think the difference here (in percentage, or sheer dollars) will bring this into play.

 

[Glene]

What your accountant / tax preparer says has nothing to do with the actual legality.

.

why is this necessary to post? He called the IRS and asked about a myriad of things I use in my biz....they told him what I wrote above....good enuf for me....

 

[bbeagle]

why is this necessary to post? He called the IRS and asked about a myriad of things I use in my biz....they told him what I wrote above....good enuf for me....

Just preparing you - I know from experience. If you're audited, I find all sorts of people who did things like deducted their entire home internet, because they occasionally wrote office emails at home. Only the PERCENTAGE of what you're using for work can be deducted. And these people can't deduct $50/month, and are only allowed, say, $5/month, and get hit with disallowed deductions and interest expenses.

My brother actually works in the TV industry and deducts his entire TV cable and internet bill because he needs TV for 'research' in his job. Even though that's bogus and his entire family watches TV all the time. If audited, he will owe a lot of money... but he is taking the risk in saving money now and the low chance of an audit.

 

[Glene]

Just preparing you - I know from experience. If you're audited, I find all sorts of people who did things like deducted their entire home internet, because they occasionally wrote office emails at home. Only the PERCENTAGE of what you're using for work can be deducted. And these people can't deduct $50/month, and are only allowed, say, $5/month, and get hit with disallowed deductions and interest expenses.

My brother actually works in the TV industry and deducts his entire TV cable and internet bill because he needs TV for 'research' in his job. Even though that's bogus and his entire family watches TV all the time. If audited, he will owe a lot of money... but he is taking the risk in saving money now and the low chance of an audit.

agreed....I am very familiar with things being reversed....

 

[8CoreWhore]

The risk isn't that they disagree with you on that one deduction, the risk is that it may prompt them to exam your other deductions. Let others be the guinea pigs, it's not worth it.

Do people write of their Rolex because their business requires them to know what time it is? I know the Apple Watch is different, but don't count on some auditor thinking so.

 

[JayLenochiniMac]

why is this necessary to post? He called the IRS and asked about a myriad of things I use in my biz....they told him what I wrote above....good enuf for me....

And he admitted it'll get thrown out anyway if you get audited. Not exactly good enough for many people.

 

[Piggie]

And we complain about Apple trying to find legal loopholes to avoid paying

 

[hemolyzer]

lol, if you feel like the risk of audit is worth trying to write off your nerd watch (that's what it is in the eyes of normal people) then go for it.

 

[Newtons Apple]

I do not see whay it would be any more than an expense. I can not see how you could write it off anymore than you phone.

 

[hatdude]

For anyone who has their own business or does contract work, we've always been able to deduct iPhones and accessories (charging cables, etc.). I'm wondering if Apple Watch counts as an accessory, from a legal standpoint. That's how Apple is going to list it in their earnings report. It's just an expensive accessory that extends the function of the phone. Any issues with that?
Just looking for one more excuse to purchase one.

There are a lot of cases where it could be deductible:
1. You offer training in iPhone/AW development
2. Journalist reviewing AW
3. Consultant trying to portray a tech savvy image.
4. You want to discretely receive alerts while meeting clients

Honestly the cost of an AW sport or AW Is low enough that any reasonable reason will be acceptable by the IRS.

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I do not see whay it would be any more than an expense. I can not see how you could write it off anymore than you phone.

As an individual you can't write it off. You need to be self employed

 

[asparagus]

First things first, IRS Circular 230 requires that I say that nothing I advise should be used to commit fraud or avoid penalties. Talk to a tax professional about your specific situation.

The problem with the question of whether you can 'write it off' is that it depends on your tax situation, which will be unique to each person. The key question is how to consider the watch.

If it is defined as a part of your clothing (e.g. jewelry), then it is not deductible, period.

Secondarily, if it doesn't have a justifiable business use, then it'd be considered for amusement, and not be eligible for depreciation.

The next question depends whether you are self-employed, or are an employee. If you're an employee, then the question is whether it meets the two part test. First, it must be for your employer's convenience. Second, it must be required as a condition of your employment. Since the watch doesn't exist yet, I would be highly skeptical of a claim that it's required as a condition of employment.

Under Publication 946, "Listed Property" includes assets with both business and personal uses, like cars, computers, etc. As Listed Property, it could be eligible for depreciation, which could reach 100%. However, it would require a business use.

To depreciate the watch, you will have to depreciate the Apple Watch based on your business use %. To do that, you need a reasonable method to demonstrate how you allocate personal use vs. business use. Simply saying "Oh, i wore it to one meeting, boom, 100%" won't stand up in an audit.

If you're a programmer, then buying one for test purposes would absolutely qualify as a business use. However, you'd want to determine how much of the purchase was for pleasure/recreational purposes, and how much was developer related. Similarly, if you're a fitness professional, and use it as a fitness watch, then also, yes, you could deduct it as being related to your profession. However, again, you'd have to determine use %.

However, for most of us, I believe attempting to 'write it off' would be a very aggressive tax position.

Source: http://www.irs.gov/publications/p946/ch05.html.

As always, consult a tax professional.

 

[bbeagle]

As an individual you can't write it off. You need to be self employed

You can write off 100% of expenses being self employed, but you CAN write off expenses being an hourly or salaried employee.

Any work expenses over 2.5% of your income you CAN write off. For example, you make $50,000 - the first $1,250.00 you spend is NOT deductible, but the rest is. So, if you work from home sometimes and have a home office, which you figure to be a $1,000 expense... then buy a $600 Apple Watch, you can deduct $1600-$1250 = $350.

 

[Chupa Chupa]

Be prepared to show it's integral and directly related to your work if audited. If you can convince an IRS auditor you are golden. If not you'll have to pay any taxes due plus interest and penalty or appeal to judge and convince him or her.
Also probably easier for a Sport edition to fly under radar than SS or 18K.

Personally I find it being integral to any job other than a h/w or s/w developer or accessory designer a tough case to make.

 

[c.s.]

Personally I find it being integral to any job other than a h/w or s/w developer or accessory designer a tough case to make.

Agreed. As a designer/video editor, it's easy to make a case that I use an iPad/iPhone for business, both using it as a tool and creating content for it. I don't think either will be the case with the watch.

 

[Chupa Chupa]

Agreed. As a designer/video editor, it's easy to make a case that I use an iPad/iPhone for business, both using it as a tool and creating content for it. I don't think either will be the case with the watch.

Unless you are making AW compatible iOS apps.

 

[Dhonk]

Given that the watch is billed as a fitness tracker, can I use my HSA?

 

[Squid7085]

As an accountant, I can say that just about anything can be eligible as a tax write off if you are creative enough. But a $17,000 item that is "necessary" to business would be pretty tough to back up in an audit.