If you've bought an item for your business that has a useful life of over 1 year, then you'll need to report that you have a business asset.
If you’re filing your taxes with a tax filing software, you’ll need to report that you have a “depreciating asset” for your business. You can usually find this option in the “Business expenses” section of any filing software. If you’re filing taxes by hand, you’ll need to fill out Form 4562 - Depreciation and Amortization.
You’ll report your business assets, like work-only cell phones or dashcams, and then either:
1) depreciate the cost of the asset over its useful life (which means you can deduct a portion of the asset’s costs each year), or
2) take what’s called the Section 179 deduction, which allows you to deduct the entire cost of the asset this year, as long as the asset is used for work over 50% of the time. For example, if you bought a new phone to use for your Uber work but only use it for work 25% of the time, the cost of the phone wouldn’t be eligible for the 179 deduction.
The depreciation (or deduction) method that you choose depends on what would be most helpful for your business this year: would you rather be able to deduct the entire cost of the asset this year, or be able to deduct a portion of it for multiple years (and plan ahead for income taxes in future years)?
Looking for more detailed information? Check out this article from our partner H&R Block!