Can I Write This Off?

Can I write off data security software?

TL;DR

Data security software can be deductible if it is used for business purposes.

Detailed Answer

Data security software expenses are deductible as a business expense if the software is used to protect business data. This applies to both self-employed individuals and businesses. However, if the software is used for personal purposes, it is not deductible. For mixed-use, only the portion used for business can be deducted. For example, if you use the software 70% for business and 30% for personal use, you can deduct 70% of the cost.

Where to Put It on the Tax Form

Schedule C (Form 1040), Part II, Line 27a for self-employed individuals. For corporations, it goes on Form 1120, Line 26.

Real World Example

A freelance graphic designer purchases antivirus software to protect client files on their computer. They use the computer 80% for business and 20% for personal use, so they deduct 80% of the software cost on their Schedule C.

Calculation Required

A calculation is required for this deduction.

Calculate the percentage of business use by dividing the time or usage dedicated to business by the total usage, then apply this percentage to the total cost of the software to determine the deductible amount.

Audit Risk & Documentation Tips

Keep receipts and documentation showing the purchase of the software. Maintain a log or record of how the software is used to justify the business use percentage. This can help mitigate audit risk by providing clear evidence of the business purpose.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

FreelancersSmall BusinessIT ProfessionalsConsultants

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 7, 2025

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