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Tax Deductions You Can Take For Your Home Business

By: Charles Kassotis

Many people who work from home offices know how important tax deductions can be. Without the benefit of having employers to help shoulder some of the tax burden, it can be difficult to pay one’s taxes. Deductions offer a way to pay a smaller amount of taxes. Here are some of the basic deductions that you can take when you use a home office. Note that state taxes vary from federal taxes, and you should check with your state before claiming deductions on state forms for home office expenses.

Office equipment used for your home based business is deductible. Even if you use it for other things, you can usually count it. But you will have to figure out how much of the time it is used for your business, and how much of the time it is used for personal use. For example, if you have a printer at home that you use mainly for printing invoices for your clients, but sometimes you print out your son’s homework, you need to figure that out. Maybe you use the printer 80% of the time for business and the other 20% for other uses. You will have to pro-rate the printer, though. You can claim less of a deduction each year that it is in use. The same goes for a computer. Basic office supplies like paperclips, telephone, paper, and staples can also be deducted. But they should be used strictly for your home office, and not for other things.

Your actual home office space can also be deducted. It is best if you have an entire room in the house set aside for your home business, so that the calculations are easier. What you do is figure up how much space, in square feet, you use for your home office. Then you divide that by the total square feet of the house and multiply the result by 100. That will give you the percentage of the space in the house that is used for your home office. You can then use that percentage to figure out how much of the mortgage or the rent goes to the home office space and use it for a deduction.

Even services can be deducted. If your business depends upon the Internet for its functioning, you can figure up how much of the time you are using the Internet for business (in a percentage, like around 60%). Then you can take that percentage and apply it to your monthly Internet bill. The same goes for telephone. There is even a calculation you can do for other utilities like electricity.

Fees you pay for your business’s Web hosting and domain can also be deducted. Additionally, advertising also counts as an expense, so if you advertise your home business in the local paper, the cost can be deducted. Just make sure that you keep careful track of what you spend, and make sure to save the receipts. And if things look to be getting a bit hairy, you can consult a tax preparer to help you with the business end. If he or she just helps you with your home office deductions, you can deduct that too.

Article Source: http://articles.directorygold.com

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