An annual machinery service contract belongs on Line 21, repairs and maintenance.
Why line 21
A contract that buys scheduled maintenance for the year is repairs and maintenance on line 21, because what you are paying for is upkeep of property you own. Timing is the part people get wrong: a cash basis filer deducts a prepayment in the year of payment only if the benefit does not run more than 12 months past the start of the benefit period and not past the end of the next tax year. A contract that also covers parts is still line 21, unless a particular job rises to a betterment or a restoration, which is capitalised on its own.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so an annual machinery service contract lands on Line 21 without you sorting it.
Start for freeWhat an annual machinery service contract is confused with
- Line 20a, rent or lease of vehicles, machinery and equipment
- Paying to use a machine you do not own is rent on line 20a, while paying to keep a machine you do own in working order is line 21.
- Form 4562, form 4562, carried to schedule c line 13
- Scheduled upkeep under the contract is line 21, but a major component replacement billed under the same contract is a restoration recovered on Form 4562.
Examples that belong on line 21
- A $1,200 annual service contract on two commercial sewing machines
- A $480 a year plan covering twice yearly service on a kiln
- A $2,400 contract covering a year of scheduled service on a print press
- A $360 annual plan on a commercial dishwasher
- A $75 a month maintenance plan on a laser cutter
What does not belong here
- A prepayment that covers more than 12 months, where part of the cost belongs to the later year.
- An equipment rental, which is line 20a.
- A warranty bought as part of the machine's purchase price, which follows the asset.
- A contract on a vehicle, which is line 9.
The limit that applies
The 12 month rule for prepaid expenses: a prepayment is deductible when paid only if the benefit lasts no more than 12 months and does not run past the end of the following tax year.
What to keep
Keep the signed contract showing the period it covers, the invoices and the dates of each visit. The period on the contract is what decides whether the whole prepayment is deductible this year.
Other expenses on line 21
| Expense | Line |
|---|---|
| a camera sensor clean | Schedule C, Line 21 |
| a laptop screen or battery replacement | Schedule C, Line 21 |
| an HVAC repair in a building you own | Schedule C, Line 21 |
| painting a rented studio | Schedule C, Line 21 |
| pest control | Schedule C, Line 21 |
| repairing a broken tool | Schedule C, Line 21 |
| routine cleaning of business premises | Schedule C, Line 21 |
| servicing business equipment | Schedule C, Line 21 |
Related lookups
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so an annual machinery service contract lands on Line 21 without you sorting it.
Start for free