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FreakSquad t1_jbsx9le wrote

Reply to comment by vtrx2000 in Dell’s Latitude 7330 convinced me that business laptops are too expensive by dapperlemon

Whether it’s a self-employment situation or a mega-corporation, the same thing holds - it is never worth making a purchase you don’t need in order to “save on taxes”.

For ease of math - let’s say revenue of $10,000, expenses of $5,000, 20% taxes. In that situation, you’ll pay $1,000 in taxes on your $5,000 of net income because yes, you can deduct legit expenses from your taxable business income.

If you decided during that year to spend $1,000 on a computer you don’t need, now you have expenses of $6,000, so you’ll pay taxes instead on $4,000 of net income - 20% of that would lead to a $800 tax liability.

So you spent $1,000 to save $200 - purchasing that computer still cost $800.

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VTCEngineers t1_jbt8pb1 wrote

Not trying to argue here,

But are you factoring in a depreciation schedule on the laptop? This is where it really starts to have an impact on tax liability.

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Meduvs t1_jbt98wt wrote

No it doesn’t. Depreciating means you spread out the expense over multiple years. For example instead of the expense being 1000 in year one, you will have 200 for 5 years. Total tax saved still 200 over this time period

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VTCEngineers t1_jbta752 wrote

For a single purchase sure it doesn't make much of a difference.

however if say you have a $1000 tax liability, and having say 5 laptops that $200 x 5 now made you have $0 liability ( honestly the numbers really only make sense when we are talking 100s or thousands of machines).

Is how I have come to understand how it can help with taxes. but honestly no one single thing helps but many different types of deductions combined together.

Again not trying to argue, but get a better understanding.

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Meduvs t1_jbtahsq wrote

It’s still the same, ofcourse if you need them it helps you lower your taxes. But if you are buying them just to write off the tax then you are spending more than you’re saving. As said, when you spend 1000 to save 200 on taxes you’re just losing 800. Unless as I said you need them, but that was not the point made.

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VTCEngineers t1_jbtau7j wrote

Ah yeah ok i understand what the point is now, yeah doesn't make sense to buy 5 pcs if they aren't being used financially speaking.

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