How to Write-Off Your Apple Watch and Electronics | with Mark J. Kohler Attorney, CPA

Hey everybody, thanks for watching for a quick moment. I've got a surprise for you today. We're going to talk about writing off the Apple watch. I know that was, that's kind of a Wonder Woman or super twin thing. I don't know. The studio here, they said I had to do that. So we're doing Apple watches, we're doing smart watches, we're doing Android watches. You've got to maximize your tax write offs. And I want to be here for you for the next 20 minutes live Q and A, helping you save taxes, get a bigger refund for your taxes. You may have not filed for 2018 and doing it right in 2019. So the topic today is how do we write off these cool devices on our hands and all electronics? And I'm open to comments. I would love to hear some comments of someone out there that has a creative write off when it comes to electronics. So I'm just going to get your juices flowing first of all before we get to the watch. Oh, by the way, real quick, I'm going to be giving away a book, the tax and legal playbook. I have a whole chapter on the missed deductions, the write offs. So many business owners don't maximize. And I'm here for you. I'm a CPA attorney, best selling author, yada yada. And if you've got a question on what you can write off on last year's tax return or here in 2019, throw it down. I'm going YouTube live. I'm going Facebook live, all of my entrepreneur peeps and those on my YouTube channel. Okay, here's the deal. Think of your cameras. I would love you to write off any camera you purchase because you're going to use that camera to take pictures for your website, to possibly even shoot video. And I'm thinking video cameras for video. But some of those nice canons, you know, you're going to be shooting video with your dslr. Dlsr. How do I say it, Dylan? Dslr. I always get the L and S mixed up. So if you're shooting with the DLSR or you're doing video, you need to take right off all those cameras because you need them for your website. Maybe you're doing real estate, maybe you're doing products, you're doing services, you're doing a YouTube channel. All of those electronics should be a write off. Number two, I wrote off a drone. Why not have a drone to take pictures of your business property, your rental property, maybe some videos for your YouTube channel. Pictures for my YouTube channel. Which is my business YouTube channel, of course, and for my website and for my real estate. So I think that's a great another way to think of some write offs. Now let's get to the watches. So anyway, the IRS considers these watches, Bluetooth device, I can make phone calls on it, I can control my calendar, I can make appointments. This is much like an earpiece. It just happens to be on my arm. Now you cannot write off a regular watch. That is a personal jewelry item. But if you have a smart watch that you can use in your business, there's our write off. Folks, here's the deal. When you go to think about doing your tax return last year, I want you to think of all the expenses you may have made, made at Best Buy, Apple Store, anything electronic whatsoever, a Sammy's or anything like that. And if you can use it in your business, I can write off maybe all of it and or a portion of it. So it's very common that I can do a portion of it even if you have some personal use. Now what I like to do about laptops, let's go to laptops. Let's. Laptops are a great one because as long as you have a desktop computer somewhere in your house, that's for your personal use. See what I mean? You got your desktop computer for personal use. Now you buy a laptop. That's so you can be on the road and do business. Especially for you Internet marketers or those that are selling product, you need to always get online to control your PayPal, your merchant account, your website thing you may be doing online. My daughter sells products online and she's got to have cameras and video cameras and lighting backdrops, all sorts of material that you're going to use in a production to sell a product or service. Also on this note, I wanted to say, do you know there's more searches on YouTube every day than Google? And so if you're running a business, you should be having some sort of YouTube channel. Another child, I have four kids. I've got three children that have businesses. One, all my college students have businesses. And one of my other daughter, I have twins. She sells real estate, she sells raw land and she's working on a realtor license. Well, I want her to shoot video for her YouTube channel. She's got her own website to market her her properties and all of her equipment is going to be a write off. Now let's get to phones. See, look at this. Let's make a quick list. We've got our watches and I'm going To put a smartwatch, a regular watch is not a write off. We've got drones, we've got cameras, we've got video cameras. I then I wanted to talk about laptops. Right, we hit that. How about iPads? Because you're going to need access to your iPad to return social media during the day, shoot video, hold webinars. I want iPads to be a write off and then the next one is the home, the computers. Now computers again. The big thing here is with the IRS is they're going to expect everybody to have some use of a computer. Makes sense. So if you can dedicate a computer, an old one for personal use, then the laptops I can go 100%. The iPad I can go 100% because you use your computer for the personal items. So it's okay. And it's very common to do a percentage of personal and business use. So you're going to talk to your accountants, your accountant to try to come up with each piece of property that would be there. Now down below, if you've got a suggestion on something that you think should write off or you want to ask a question about this, it's really straightforward and I want you to go back into last year, go through your credit card statements, go through your debit cards and think of anything you may have bought at the Apple Store, Best Buy or these computers and technologies. The the next thing is don't worry about using your business bank account for all of these types of expenses. You that may have started your business and you're just getting off the ground. Maybe you bought some of this stuff before your business launched, you can contribute it to the business and then write it off or a portion thereof in the year you start business. So I really like that. And you can't write off the fair market value. You can only write off the basis of what you paid for it. So if you've got a really good deal, that's where you start. You can't say that's the fair market value. So don't worry about it not going through your business bank account if you're starting. The other thing is I had a phone call with a client today that has a small business and it's real estate. And so they're over here with their LLC doing real estate. And they're like, well, I invest, but they have a day job W2 and their spouse has a day job. I said you're not in a real estate investor, you're a real estate business owner. And so when you think of it that way, are you going to go through your rental property and take pictures on a regular basis? Do tours for your insurance policy? Take a drone video footage, square footage above so you can show your property for two new tenants or buyers. So this is where I want to write a lot of this stuff off. And you may say, also I get the excuse. Well, I don't get a write off, I make too much money. Oh, no, no, you'll get the write off. It's just delayed gratification. So I want all these expenses to go into a bucket and we'll carry forward these losses. And whenever you sell a property, we can dump those losses off and makes and pay less tax. So I want to be able to go that route. So track all your expenses, no matter if they're on a credit card or a debit card. I'd like to see receipts. But receipts are there for audit protection. So if you ever get audited, we can go there for, print them out and use it. You can scan them in, save them, and then also as you're going through all of your expenses, you can talk to your accountant about the percentage of business use and how much you write off. Now I'm here with, we may just keep this to be a short little quick video to the point writing off your electronics, Apple watches. I'm trying to think if there's any other electronics I'm missing. Let's go back through our master list here. Oh, I wanted to talk about your cell phones. Now here's the rule with cell phones and business. This was an IRS ruling in the last few years. You can write off 100% of your cell phone and this phone service as long as you can show you have a home line, so you have a home line for personal use, you can justify the cell phone for business use. Now some of you say, well, Mark, I don't even have a home phone. Well, just ask your AT&T, your DIRECTV, your U verse, your package home with cable to issue you a phone number. A lot of people can get a phone number issued to them as part of their order ready digital, digital, satellite or cable service. Also, if you are married, one of you might have a cell phone and you say that one's for personal use and then the other more expensive phone is for business use. So you can use cell phones and as 100% or you, if you have, if you're in a partnership, marriage, whatever, have two cell phones, one dedicated to personal and one to business. And then I can wrap 100% of that self service. What I do too is I have my family, my wife and kids are all, all of them and all of them have different roles to play. And so I pay for cell phone. Anyway, I'm going to wrap this up if we don't have any other questions. Oh, question, sorry. Oh, wow. Asked camera. Can I write off for classes? Okay, Charlie, that is a great question. In general, I'm going to say yes. Now we have to ask ourselves, is this a top line college, university, college? Was it just a training course online? Was it improving your skills as a business owner because you needed to take this photography class or a class on how to shoot video for your business? So if I can directly relate the class to your business, I'm writing it off, Charlie. But if it's just for you to become a better to get a college degree, we're not going to generally go there. I normally do not write off tuition at a college university because that's built for your personal education. But if I can directly relate it to your business, I want to write it off. So I'd bring it up with your accountant on that one. Another question.

Dallas, Texas here. He wants to know, he's a corporation, but they operate in California as a sole price. But he wants to know where the deduction goes.

Okay, this is Dallas, Texas. He said, they have a corporation, I take it, in Texas, and then they operate as a sole proprietorship in California. That's a little unique because I'll tell you now, if your corporation is doing business in California and the California Franchise Tax Board finds out about it, they're going to make you register to do business in California and they can fine you up to $800 per month as a minimum franchise tax for not registering in California. And I know it sucks and I know you want those clients in California. Now you may say, well, Mark, I really don't do business in California. I just have clients from California. Okay, I might not register you in California. This is called Nexus. And if you have employees in California, you have a location. You have subcontractors on the ground in California. Going out and selling in California. What's really going on? Dallas, your business, your corporation is doing business in California. I don't think you can justify it as a sole proprietor. So I would look into you doing business in another. You need to register to do business in that state. Now I can have someone from California call me up and say, mark, I want you to set up my llc. Okay, cool. I'm not doing business in California, but if I go to California and start knocking on doors or have employees or an office there. Now I need to register there. Second, if you said you have expenses, I'm going to write them off in your corporation in this sole proprietorship. I don't know what's going on with that. I would really get a second opinion because normally I'm going to just. If it's a sole prop of the corp, you're going to do a consolidated tax return, you're going to write it off all here. I think you should have a call your accountant or get a second opinion on what you're doing. Facebook, what do we got?

Two Apple watches you really need to see.

Okay, I do not own two Apple watches. We thought it'd be cool. In fact, this one's cutting off the circulation to my hand. Okay, so this was Mallory's watch and she says you can borrow my watch. I mean, she's got the body of a teenager, so this is just tiny. So anyway, my hand can breathe again. So anyway. But no, I have one Apple watch. We're good. We're rocking. Yes. Next question.

Okay, so 8. Okay, he said that I'm starting a new start media marketing business. I need to buy a new computer, camera and some other equipment for podcasting. Can I write off this stuff if I don't have clients yet?

Okay. Elok says now this is a walk. A L O K says he's starting a Internet marketing social media business and he has buying a camera, buying a computer and getting all geared up to do podcasts and a YouTube channel and all that good stuff. You're going to use Zoom or Skype. I don't know what you're doing. Love it. Now listen to what's going on here. He might be in what we call startup mode. He's spending money in order to launch the business. Now let's say this is his start date of when he's going to start his business. So what he is is in startup mode. This is startup mode and it's very common. So you're going to get to write those off. But not until you have your first sale. You got to sell something. Some of you heard me. Let me give another example. If you're going to go open a lemonade stand, you're going to buy sugar and cups and ice, build your sign. You got the coolest looking lemonade stand on earth. It's out there on Main street and you're ready to go. Are you in business yet? No. Can you write everything off? No. Not until you sell one cup of lemonade. Now you're in business. So I'm going to take all those startup costs, write them off up to 5,000 in the first year. I'm going to write all them off in the first year once you have a sale. So a lock you want to get out there, you want to start making money as soon as possible because that's the triggering point to start writing everything off. So people track all your expenses even if you're in startup mode, until we have a sale.

Mallory, back to cell phones. Osman wants to know if I have a Google Voice number as an app for my business.

Okay, so first name. Osman says he's got Google voice. Now this is a tricky one. So let's say Osmond says I want to use Google Voice for my home phone and then my cell phone's a write off because I have Google voice for my home. Well, what's really powering Google voice, it's your Internet, right? Your Internet pays for your Google voice. So now I can't write off your Internet at home because your Internet is really providing your home phone number. I would rather see your your phone number tied to your cable because I'm normally going to not write off personal cable or DirecTV. It's too personal. Even if you watch Fixer Upper with Chip and Joanna, I'm not going to write that off. But your Internet I would like to write off as a business expense. But if it's powering your Google voice, tough. Now let's say you have Google Voice for everything. Second option, Osman, you've got Google Voice and Internet at your house. It runs your home phone line and business line. Well, I'll write off half Internet so we can do a portion thereof. But we want to look at your cell phone. I bet, Osman, you have a cell phone. So we're going to deal with that write off and maybe allocate Google Voice to your Internet.

Yes, Mallory, Nicole says, should I write up or, excuse me, should I register my LLC as an S corp in South Carolina or have my Florida S corp act as a parent company for state tax income purposes?

First name, Kayla. Kayla. Okay, Kayla is in Florida with an S corporation. Now if she has an S corporation, we're not talking about passive income. So Kayla's over here doing business. Kayla is in Florida and she has a Florida S corp. Alright, cool. Now she goes does business in South Carolina or was it North Carolina? South Carolina. Well if she's doing business. Now again people, if someone from South Carolina calls her up or goes on her website and just Buys a few products. Am I going to pay tax in South Carolina? No, I'm generally not. I'm not even going to sales tax. Under the new laws, you got to have a certain number of sales most states before you even collect sales tax. Does she have a location in South Carolina? Does she have an office with employees in South Carolina? Own real estate? If Kayla says no, I just have a few South Carolina clients that call me in Florida. See, again, I'm not going to register in South Carolina. Now if she says no, Mark, I've got operations in South Carolina. Going to have to allocate some of my revenue to South Carolina. I tell you, the first thing I do probably Caleb, is just register foreign. Take your S Corp and register it in both states. Then you're going to bifurcate your income. The portion that goes to South Carolina, you pay tax. The rest in Florida. No state. I want you to push most of your income to Florida and pay very little state tax in South Carolina. Another thing she could do is set up a subsidiary for South Carolina. She might have partners. I don't know. But I'll tell you this, Kayla. One S corp. That's all I want you to have is one. This is your main S corp that you're doing your salary out of. I'm either going to register it in South Carolina or set up a subsidiary in South Carolina. Back to Facebook.

Robert has a question. Can I write off clothing specific to my.

Okay, Robert says can you write off clothing specific, specific to his industry? Yes. It depends on which type of industry. Let me give you some examples of yes and no. I don't need to write it down. Let's just work it here. Let's do yes. I'm a doctor. I bought scrubs. I am an X ray technician. I bought scrubs. You want to lay around in the evening and your scrubs are like pajamas for you? Cool. I'm in construction. I bought steel toed boots. I'm a fireman and needed some overalls or whatever. A policeman and bought some guns. I have two. I'm sorry, I went from clothing to guns. But that's fun, right? Okay. So anyway, but if you're buying clothing that's specific to your industry, if you're a century 21 realtor and they still make you buy a gold jacket, which I don't think they do, then you could write off your gold jacket. Now, there is an entertainment exception if you are a true, true model entertainer. Now, believe it or not, Liberace was the one that took on the IRS in this. And Elton John even had some IRS cases if I remember correctly. But I know Liberace did. Liberace was known for these flamboyant outfits. And Elton John back in the 70s also would go on stage with these crazy outfits to perform in. He wanted to write off his clothing. The IRS says no. He said, screw you, I'm going to court. So they went to court and the IRS said, well, if you're in the business of entertainment, then you can write that clothing off. And also for some of you entertainers that might be models or actors or actresses, because I model on the weekends. I don't. I'm just joking. Okay. That's what's funny about this. You know, I don't. But anyway, if you are a model or an actual actor or actresses actress, you can write off your haircuts, your nails, your makeup, because that's part of your profession. So things. You cannot write off a suit. I'm going to go to church in my suit. I can't write off my suit even though I wear it on stage. It's got so business clothing is never going to be a write off. It's just not going to happen. So it's got to be specific to your industry. All right, back to Facebook again.

Okay, Tim has a question. I travel for work. Could I write up 100% of my pamper? Is it useful when get up and

talk, Tim, I love this, guys. You're going to love this. He says he travels for business. He wants to write off his RV or camper, his trailer and he wants to write off 100% of it. Okay, so let's just. Is there a chance he could. Yes, but it's based on the facts. Number one, I need to know where is he going for business? You know, what is his business now if he's going to trade shows or maybe he's a contractor and he owns rental property and he's going to work on his rentals and, and all of his tools are in his camper and trailer. And he pulls up like you might see a trailer at a construction site and he lives in it and works in it, works on his rentals. I'm loving it. I'm writing off 100% of that trailer. Oh, but then Tim, he took the family, got in the RV and went to Yellowstone for a week in the summer. Okay, now we have some personal use look trailer throughout the year and divide it proportionally. Maybe I write off 80% of the trailer because we know there's some 20% personal use now. Does the IRS have Tim under surveillance? I don't think so. But you don't want to get greedy people. Most IRS agents are pretty reasonable and they know if you have a kick butt RV in the driveway, you're going to go out to Glacier, Yosemite or Yellowstone once during the year. Own up to it. Tim calling Tim out. Own up to it. If you're using your RV for a little bit of personal use, fine. Just go 90% Tim. Don't get greedy. But the point is people, RVs can be 100% write off as long as you have a sticks and bricks home that you live in and you use that RV for business. I'm talking, I'm interested.

Mallory Jet said are there any grants to help on startup for digital marketing?

Okay. He asked if there's grants that. In Internet marketing or an ad agency or something like that. Yes, there are grants available now. Do I know of them? I don't. Some of you that might be older, if you remember on commercials, even just four or five years ago, there's a guy that has, he'd wear a jacket, he had question marks all over him and he'd be in front of the capital and he was like there's free money out there, there's grants that go unused every year and blah blah, blah. And it was an infomercial and he'd sell his book of all the grants. That's true, it's legit. I think what you want to do is get on some Google searches and start looking for a list of grants that you might qualify for. Now I'm not going to get racial here, but I will say a single, you might have a hard time finding a grant. They're generally going to be for people that are facing uphill challenges, frankly. You know, they might be coming from a low income area. They might be challenged with color or sex or an age or a disability or something like that. But they're, you know, if just a Joe Blow out there looking for a grant, there are grants. Go out and look. But I'm just saying usually you got to fit some sort of unique criteria. I'm on an Indian reservation and trying to, you know, get my family off the ground with a new business. You might have some chances there. So just look around and I mean to offend anyone, but that's typically how grants work. They're going to look for a segment, segment of the population they want to help.

Lucretia has a question. So how do you calculate the amount of household for a home based Business, Latricia.

Fair enough. Lucretia. I apologize. She says, how do you calculate your home based expenses for your business people? This is very important. This is the home office deduction. I want to let everybody know, I'm not writing off your groceries, I'm not writing off your home and all this crap.

You.

There's a lot of aggressive tax planners out there. Not a lot. I want to say that there's a few tax planners out there that try to write off everything under the sun. Now, do I want your kids on payroll? Sure. Do I want the home office deduction? Absolutely. But if this is your house, what we're going to do is we're going to find out what's that segment of your house that you use for business. And it's going to be a square footage scenario. And we're going to say, all right, I've got two options. I can go simplified or actual. I'm not writing off the fridge and the groceries and all that crap. I'm going to go for the simplified home office, which is $5 a foot, up to 300 square feet, for a total of $1,500 for the year. Not bad. Low hanging fruit. Go grab it or you're going to take a percentage. So if this is 200 square feet and I've got a 2,000 square foot house, that means I'm using 10% for business. And I take this 10% and I multiply it by my mortgage interest, property tax, utilities, all that stuff, but not groceries and some of those household expenses. So be careful there. But this is the long version and you're going to use a percentage of all those things. Mortgage interest, property taxes, utilities, HOAs, a lot of improvements, repairs, and then over here you're going to go simplified.

Kevin wants to know he bought some equipment two years ago for a startup that will incorporate this year and he's going to make his first sell this year.

Okay, so Kevin said he bought some equipment two years ago. He was getting ready to launch a business that will now be incorporated this year. Kevin Lovett. And he wonders, can I write that off? Absolutely. What we're going to do is contribute it to the business and start depreciating it. Now you can only contribute it to the business on its basis. Meaning what you paid for it. I can't. You can't say, oh, I bought a computer five years ago or I bought something cool and now it's worth more. No, you got to take whatever you paid for it two years ago. That's what you're going to put on the books. We're not going to get a 179 deduction because you have to actually buy it during the year in order to get a bonus or a 179. But we can start depreciating it. And I'm pretty sure on that some of you accountants might be agreeing with me. Back over to Facebook real quick.

Jennifer has a question. As a business in my second year, it says 2018 tax loss amount that is too much.

2018 is too much.

Yes. She's asking if there's a tax loss amount that is too much for 2018 for a business.

Oh, being too aggressive. First name. Okay. Jennifer says this is good for everybody. She said she's in her second year of business. She just filed her 2018 taxes or getting ready to and she's got a big loss and she says how much is too much? Well, Jennifer, it depends. It depends on your overall situation. You know, what other income you might have. It 10,000 or is it 50,000? You know, if I have a client making a million dollars a year and they have a hundred thousand dollar loss, it's not going to be as bad. If they're making 50,000 a year and have $100,000 loss, it's going to shine like a red flag. So I want to look proportionally based on anybody's income. But let me tell everybody this. You can have losses two years in a row before the IRS says what the freak's going on? Are you good at this? Do you suck? Are you losing money on purpose? Are you an idiot? What's going on? The IRS is going to ask you that. So you've got two years where you can lose money, Jennifer. But don't get greedy. And I'll tell you if it's a legit business and it's a legit loss and you're making money except losing bottom line profit. At the end of the day, you're entitled to it. So just be ready to duke it out if you get too aggressive before you do your return. I would. If you're doing it yourself on TurboTax, get a second opinion. If you're concerned about it, go to your accountant and that sort of thing. All right, one last question here on YouTube.

Michelle asked. She started a business last year. She bought a lot of electronics and Stephanie. And software. Did she write off the software?

Okay, so Michelle bought a bunch of software last year as well as electronics. She wants to know can she write it off now? Michelle, I'm going to first. Michelle. Right I'm going to presume that you had income last year. And just like I said to Jennifer, the more income you have, the more crap I can write off legit without drawing attention to your situation. Right. So don't be aggressive. That's point number one. So I'm going to look at how much income you had last year and I might spread out those expenses as a startup cost if it looks too aggressive. So see, doing a tax return is a work of art. This is why TurboTax can be a little dangerous for a business owner. Hey, if you just got W2 income and a day job, some kids and some charity freaking go to TurboTax or Tax Slayer, which I love, that's where I'd go as tax layer. Go for that all day long. But if you've got a small business, you really need to be cautious of some of these big write offs and losses. So Michelle keeps Can you write off software? Yes. Software usually has to be depreciated. I think over three years. I would just you can google it quite quickly and say software depreciation schedule. I'm embarrassed. I can't remember the depreciation schedule on software. It's going to be three or five years. Sometimes you can expense it all in the first year. Depending on your income level we might 179 it, which means you can write off the whole thing in one year. So again, talk to your accountant and I would yes, you're going to write off software. The question is are you going to spread it out or are you going to write it off all in one year? And it's going to depend on some variables. Well guys, I love it. Thank you so much for these questions. Now subscribe to my YouTube channel. Click the bell if you're on Facebook. Especially get over to YouTube. I've got probably 70 plus videos on all sorts of awesome topics you would love and thank you. Thank you for watching. I'll be here every Thursday. Save up your questions for YouTube Live and Facebook Live and I've got some great books on Amazon. Just search for Mark J. Kohler. I've got some awesome videos on my website that are very, very affordable. Lifetime membership to all these little videos for a few hundred bucks on for hours on end on ways to build your business and grow it and save on taxes. People remember this. It's just, it's not just making money, it's saving money too. It's the yin and the yang. So just don't hyper focus on those cool Tony Robbins events and making money. Remember to protect it and save taxes everywhere you can. It's your number one expense. Thanks. Keep living the dream. Boom.