Tax Deductions

[dougc]

Hey there.

I was looking at getting a new monitor. It could wait until next year sometime, but I was thinking about getting it before the new year to use as a tax deduction for this year. I know that a lot of numbers are involved in this process, but if I get a $1000 monitor, about how much of that will actually be deducted?

Thanks,

dougc

[johntabita]

All of it.

That's not to say you get $1000 more back on your taxes, but $1000 will be deducted off of your taxable income, like so:

Your total income for the year: $50,000
Your total deductions for the year (i.e., money you spent for business-related items, including your monitor): -$10,000
-------------------------
Taxable Income: $40,000

The IRS will look at that amount and compare it with what you've already paid, and, based on your tax bracket, you'll either own them money, or they'll owe you.

[dougc]

That makes sense. Thank you very much.