I’m going to purchase Turbotax to do my taxes next year. Is the full cost or just a portion of the cost deductible against my rental income? Thanks for any and all replies.
fully deductible.
Thanks Mark. What expense would I classify this as? Supplies? Professional fees? Thanks again.
office expense. whatever. won’t matter.
I am guessing that you are operating as a sole proprietor. Your rental income and expenses are reported on Schedule E.
In this case, the tax preparation software will not be used exclusively to report your rental income, but instead, will be also used to report all your personal non-rental income, dividends and interest, and perhaps your itemized deductions on Schedule A as well as capital gains and losses on Schedule D.
When you itemize your deductions, the cost of the tax preparation software is reported on Schedule A as a miscellanous deduction.
Look at it this way. Even if you did not have rental properties, you might still purchase the TurboTax product to do your tax return. Since the tax preparation software is not exclusively used for your rental activity, I would have a hard time justifying it as a rental expense.
Contrast this with purchasing Quickbooks just to track your rental activity. Or perhaps, purchasing a rental management package such as RentRight. In these instances, the software is exclusive to your rental activity and would not have been purchased if you did not have a rental activity. I would not have any problem charging these items as “supplies” on Schedule E, although I would most likely use line 18 and describe the entry as Accounting software or Rental Managment software.
Just the way I see it, but I tend to be conservative when it comes to the IRS.
I would take it 100% as a business deduction related to the Sch E.
Look at it this way: if not for the rentals, he wouldn’t need to purchase turbotax - he would be able to do his taxes manually. Thus the expense is 100% related to the rental business.
and they’re never going to question 30 bucks anyway.
Then I would suggest real1 purchase TurboTax Premier because it includes modules specifically for the rental property owner. The TurboTax Premier version retails for $75 at the Intuit website. It does have extra guidance for rental property income and expenses as well as help for refinancing rental property that are not included in either the Basic or Deluxe versions.
If real1’s going to argue that this purchase is a necessary expense to his rental activity, then he should at least have the version of the product that best supports his claim.
I used Turbo Tax Premier last year and it made the process very easy…I believe it’s the way to go and the expense is wortht he trade off in reduced aggrevation…
Without the rental properties, I have no real need to use Turbo Tax --I just use “stubby pencil” and a spreadsheet…
Keith
Thanks for all the comments. Dave is correct in his assumption - I am a sole proprietor. I did purchase the premier edition, so i’ll take the deduction at 100%.
Compared to doing it by hand, I think you’re going to like the TT Premier…for the hassle reduction, I think it’s well worth the additional cost…
Keith