Join our Waitlist for Expert Advice!

Is the Apple Watch Tax Deductible? Sounds like a good portion of it just may be -- as long as you steer clear of the gold $17K piece.

By Mark J. Kohler

Opinions expressed by Entrepreneur contributors are their own.

Apple
Apple Watch

I know many of you die-hard Apple fans have already been to an Apple Store and tried on the new watch. Others of you have probably seen the ads and wondered if -- or rather how -- this new device will truly change your life for the better.

So wouldn't it be nice if the Apple Watch was also deductible as a business expense? It should be, right? You need it in your business in order to be more effective and efficient as a communication tool and the IRS should see it our way…well…maybe hold the phone for a moment.

If you own a small business, you should already know that since 2011, your cell phone and other similar telecommunications equipment are specifically excluded from the definition of Listed Property (IRS Notice 2011-72). Meaning you don't have to provide a log detailing your personal and business use on the device. In fact, if you can show you have a home phone line and need your cell phone for business, you can typically deduct 100 percent of your cell phone and the accompanying service.

Related: The Apple Watch Only Costs How Much to Make?

Moreover, under IRS Code, any expense that's ordinary and necessary for that business is deductible, and would typically include related telecommunications equipment like a Bluetooth or headphones and mic for those important business calls. (IRC Section 162)

So why shouldn't the Apple Watch be deductible?

Many of the watch's features are similar to a smartphone or Bluetooth device and can enhance your business sales and work productivity. Some of these features include calendar alerts for business appointments, business related texts, business calls, work email, social media for your business, Apple Pay for quick business purchases and immediate access to Apple's business-friendly apps. Not to mention the added benefit of a built-in speaker and microphone that gives you hands-free ability to take that conference call while on the road (as well as look like Sean Connery from a 1970s James Bond movie).

The risk I foresee with the Apple Watch is that the IRS may consider it "Listed Property," requiring strict proof of evidence for business use. If this happens you'd be required to provide adequate records or sufficient evidence corroborating the need for the deduction. (IRC Section 274(d))

Related: 9 of the Biggest Complaints About the Apple Watch So Far

However, there's always additional guidance when it comes to the devices and technology business owners use daily for business. For example, by definition, a computer in an area of the home that qualifies for home office deductions is not Listed Property and the substantiation rules would not apply (see IRC 274(d)(4) and Zeidler, TC Memo 1996-157). In that same light the Apple Watch could be considered an extension of your work cell phone that will help increase productivity, sales, etc.

Currently the IRS hasn't taken a position on the new device and with their current understaffed work load, it probably won't be any time soon.

Bottom line: At least some portion of your Apple Watch should be tax deductible, and it will depend on your business use of the functions. Speak with your accountant and have a serious conversation about how much you should deduct on your tax return.

By the way, if you were lucky enough to try on the 18-Karat Gold Case Apple Watch -- retailing for a cool $17,000 -- don't think the extra benefit of all that glitter and gold is going to be tax deductible. It's the functions that matter.

Related: Help! I've Been Kidnapped by My Apple Watch.

Mark J. Kohler

Entrepreneur Leadership Network® VIP

Author, Attorney and CPA

Mark Kohler, M.PR.A., C.P.A., J.D., is a highly respected Founding and Senior Partner at KKOS Lawyers, specializing in tax, legal, wealth, estate, and asset protection planning. With a reputation as a YouTube personality, best-selling author, and national speaker, Kohler is dedicated to guiding clients through complex legal and financial landscapes to achieve their American Dream. He also serves as the co-founder and Board Member of the Directed IRA Trust Company and has launched the Main Street Certified Tax Advisor Program to train CPAs and Enrolled Agents nationwide. As the co-host of The Main Street Business Podcast and The Directed IRA Podcast, he simplifies intricate topics like legal and tax strategy, asset protection, retirement, investing, and wealth growth. Mark Kohler's commitment to helping entrepreneurs and small business owners attain success and financial security has made him a trusted expert in the field, benefiting countless individuals and businesses in navigating the financial and business world with confidence.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

You Have One Month Left to Buy a House, According to Barbara Corcoran. Here's Why.

"If you are planning on waiting a year and seeing where interest rates go, you are out of your mind," Corcoran said.

Social Media

How To Start a Youtube Channel: Step-by-Step Guide

YouTube can be a valuable way to grow your audience. If you're ready to create content, read more about starting a business YouTube Channel.

Business News

These 3 Side Hustles Make the Most Money While Working Fewer Hours, According to a New Survey

The survey also found that having a side hustle doubled as a path to becoming more employable.

Side Hustle

I Made $14,000 in 1 Week With a Spontaneous Halloween Costume Side Hustle — Here's How

Sabba Keynejad was in art school when he started to refine his entrepreneurial skills.

Franchise

The McRib Is Back, But Only at Select McDonald's — Here's Where to Find It

This scarcity is nothing new. In 2022, McDonald's announced a "Farewell Tour" for the McRib, suggesting that it might be the last time customers could get their hands on it.

Business News

This New Restaurant Is Banking on One Dish — Because It's the Only Entrée on the Menu

The new hotspot is gaining buzz on social media for its innovative yet super simple concept.