Start Your Own Home Business
Do You Qualify For Home-Based Tax Deductions?
New changes in the tax laws have made it
easier than ever to claim Home Office Deductions and keep
more of what you earn.
If your home is a place of business, many
of your personal expenses can be deducted as business expenses resulting
in lower taxes.
You may be thinking, "I have an Accountant/CPA/Tax
Preparer/Tax Software who knows all about tax deductions so I don't have
to know anything about them."
There are several reasons why that thinking
could be costing you thousands of tax dollars. Some of those reasons are:
·Most Accountants/CPA's/Tax Preparers
do not "specialize" in Home-Based Businesses and do not keep up with the
ever-changing laws pertaining to them.
·You are ultimately responsible
for knowing what you can and cannot deduct as business expenses. Why? YOU
are accountable to the IRS for your deductions, not the tax preparer.
··If you pay someone to do
your taxes you still need to know what you can deduct so that you can gather
all relevant paperwork.
··The most compelling reason:
Getting the greatest benefit from your deductions.
To qualify for these deductions you must
meet 2 conditions, which most, if not all, Internet Marketers meet.
Condition 1: Do you work as an Internet
marketer out of your home (on your "home computer)?
To qualify for deducting expenses related
to using a workspace for business in your home, your home must be
Your "principal place of business " or
you must use the space only to earn your business income.
·Use it on a regular and ongoing
basis to meet your clients, customers, or patients.
AND
Condition 2: Are you in business
to make a profit?
Whether you made a profit or not is immaterial.
Even if you lost money but intended to make a profit these deductions are
still available to you.
If you answered yes to both of these questions
then you do own a Home-Based Business and as such you are qualified to
deduct Business Assets, Direct and Indirect Expenses.
Business Assets include business equipment
such as computer, fax machines, business furniture such as desk (your dining
room table for instance), desk chair and filing cabinets. These are 100%
deductible if they are used "exclusively" for business purposes.
If these assets are not used "exclusively'
for business the amount you can deduct is proportionally related to how
much these things are used in your business. It is possible to deduct a
portion of your living room, sofa, DVD player etc if you meet certain conditions.
Direct Expenses are those directly related
to conducting your business. This would include office supplies, telephone
service,, cellular phones, ISP service, hosting, advertising etc. Direct
expenses are generally 100% deductible.
Indirect Expenses include such things as
rent on your home, utilities including heating and air conditioning and
general repairs such as replacing a roof or repainting the exterior of
your home.
These are authorized legal deductions passed
into law specifically for Home-Based Businesses by congress.
If you use your home for business purposes,
many of your personal expenses can legally be converted into deductible
business expenses including utilities such as heat and electricity, cleaning
materials, house insurance and property taxes.
Learn all you can about what you can deduct
and you will consistently save thousands on your income tax each year.
"I'm proud to pay taxes in the United States;
the only thing is, I could be just as proud for half the money." -Arthur
Godfrey
Karin Workman |
