Working from home can have many advantages. Not only do you not have to change out of your pajamas but you also can make a host of deductions when you efile your taxes. The kind of deductions you can make depends on what type of businesses you have, whether or not your office is separate from the house, what hours you work, and many other variables.
The IRS has a few qualifications you need to consider before taking a Home Office Deduction. First, you must use a portion of your home exclusively and regularly as your principal place of business or as a place to meet with clients and customers. Also, you need to consider if your office or trade is in a separate structure not attached to your home. If you are using your home for storage or as a day care you need to use the property regularly not necessarily exclusively. Speaking of daycare, the IRS has special rules for qualified daycare providers. People who are self employed need to use Form 8829 when filing their taxes while an employee has even more additional rules to abide by. Lastly, how much you can deduct depends on the percentage of your home used for business.
A number of day to day expenditures, such as stamps, ink, and paper are deductible Also, the first mile you drive away from your house each day. Actually, any travel associated with your business is deductible as well as any transportation costs associated with your at home business. Speaking of transportation, a portion of your car insurance (as well as your home, health, and travel insurance) is also deductible.
Many aspects of your home are deductible, for example a part of your rent and mortgage is deductible. Not only is your lease or mortgage deductible but some of your work related bills, such as utilities, phone, and cable bills, can be deducted. Any repairs done to the office part, or where you conduct business, are also deductible Technology, such as computers, smart phones, and tablets, purchased for your at home business can be deducted.
Other miscellaneous deductions include attorney and bank fees, charitable donations, business lunches and gifts, and material costs if you are making a product to sell. All these deductions can add up to save you a ton of money when you file your taxes. The key is to be diligent and keep detailed records throughout the year so you won’t be frantically scrambling at the last minute to get all your records in order by April 15. If you find keeping track of your business expenses to be tedious just thank of the nice dinner and/or vacation you can afford with all the money you saved.