How do I claim the tools expense deduction for tradespeople?

by TurboTax•1• Updated 2 weeks ago

Prior to tax year 2023 tradespeople could claim a maximum $500 deduction for tools. After tax year 2022 the maximum deduction is $1,000.

The claim is for the cost of tools and equipment purchased for work, after first reducing the cost by an amount that is indexed annually. For 2024the reduction amount is $1,433. So for example, $2,433 or more of eligible expenses in 2024will result in the maximum deduction of $1,000. For prior years’ thresholds, see Indexation amounts. Your employer must certify (using form T2200) that the tools were required for you to do the work.

To claim this using TurboTax, select your version of software and follow these steps:

TurboTax Online

Answer the initial Personal info and Tax profile interview questions if you haven't already. This unlocks the Tax home screen.
From the Tax home screen, under Add to your return, enter employment and select Employment Expenses.
At the Employment Expenses screen, select Yes.
At the Employment Expenses Profile screen, select I received form T2200…, then continue.
At the Employment Expense Profile screen, check the box for Other employment expenses, then continue.
At the Other Employment Expenses screen, scroll to section for Tradesperson's Tools Expense, enter your amount(s), then continue.

TurboTax Desktop

Complete the Introduction/Profile steps of your return until the side menu appears.
From the side menu select Income & Expenses > Employment Expenses.
At the Employment Expense Profile screen, check the box for Tradesperson’s Tools Expenses and continue.
At the Tradesperson's Tool Expenses screen, enter your amounts for tools expense and income, then continue.
Continue answering the questions. When you arrive at the Employment Expenses Summary screen, you’ll see the amount of your claim.

Note: For those using Forms mode, you will be able to enter these amounts by locating the T2200 form.