Your Home Based Business Tax Deductions
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A big advantage of
working from home is the tax benefits of operating a home based business. Working from home Allows you to deduct portions of bills that you are already paying to live there.
You can deduct home expenses
if you actually work in your home. It is easiest to do this if you have a room set aside for your business. Measure out how big that room is in proportion to the house, and you can deduct expenses using that percentage.
For example, if your place of doing business takes up 5% of your house, you can deduct 5% of your heating expenses for the days you work. (In other words, if you do not work weekends, you can not deduct for weekends.)
You can deduct items such as mortgage interest (though not your mortgage itself), electricity, telephone, insurance, and expenses for maintenance and repair. In general, you can deduct the portion of expenses that directly Relates to your business.
You can deduct costs for your internet service provider in proportion to the amount you use it for your business, too. If it’s used completely for business you can deduct it all, but be certain before you do this that you are not using it for other reasons.
Having a CPA do your taxes for you has major benefits. They have computer software made up by tax pros and former IRS workers that you would not ever be able to use unless you went through lots of accounting training.
everything working 100% honest with your CPA about. If you are called in for an audit your CPA will tell you to say nothing but your name and your CPA does all the talking. The IRS has to find mistakes not you. If a CPA does your tax deductions you will get you would never know to take and your CPA will therefore take away deductions you can not legitimately take.
A CPA will cost you more but will get you much more back. Tax filings done by CPAs are far less likely to be called in for audits because the IRS knows the CPA’s reputation is at stake with every tax form filled out and so the CPA will be very careful that every little detail is done correctly.
Keep a separate notebook
for tax deductions on each page and make a heading for all possible deductions like advertising, supplies, repair parts, phone, computer, etc. and write them down and save ALL your receipts in a separate large envelope. Write your deductions in this notebook, everyday happen, as they. Remember, your tax preparation is a daily, year round effort and is an important part of your business.
Write everything in your notebook that could be a deduction and then at the end of the year let your CPA decide what is and is not a deduction. He or she knows and you do not. It is their job to know. This way you will not miss out on any deductions you do not know for sure on and you will not take any deductions you do not have coming. Pretty neat huh?
You will get a lot bigger income tax refund this way and have a clear conscience you did all the right things and you will not have any worries about a scary IRS audit. Talk over with your CPA what he thinks about the way you are keeping records and learn from him or her better ways to do it. They will usually have valuable tips for you to help you run your business better. This chit chat at the end of your tax preparation is invaluable to you.
The tax benefits of operating a home based business enable you to deduct things you would otherwise be paying in full. If you are considering a business from home, it’s a good way to lower your costs. This is just one more advantage of working from home.Source:http://www.irs.gov/faqs/faq-kw82.html Plus my own life experience of business tax over 40 years
This article was published at Bookkeeping Services of Charlotte, NC Related Articles Business Taxes
Small Business Tax Deductions – Top 5
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With tax season
just around the corner it is never too early to start thinking about available tax deductions. Small business tax deductions are important to Ensuring that you are getting all the return that is possible. Some tax deductions for small businesses are:
* Office furniture* Office equipment and supplies* Software and other subscriptions* Insurance premiums* Retirement contributions
In addition to these deductions there are a few other deductions that should be kept in mind while filing. Simply keeping good records throughout the year will help with these items and wants to make calculations at tax time less stressful.
Social Security
If you are self-employed or a small business you have to pay double the social security as you pay as both the employer and the employee. The good news is that you can claim back on your 1040th helped
Home Office
If you have a room in your house that is used exclusively for your small business it may be used as a deduction. The room can not be used for any other purposes to qualify. You can claim a percentage of rent or mortgage and utility bills based on the square footage of your office area in relationship to the square footage of the house.
Mileage
Keep a journal in your vehicle of all small business related travel and expenses. At the end of the year this can be claimed one of two ways. It can either be deducted as a straight calculation of mileage times the allocated rate plus other expenses or it can be completed as a percentage of the total mileage on the vehicle plus expenses.
Travel and Gifts
hotel stays, travel on airlines or other forms of transportation and all gifts are deductible. Saving receipts is critical to be able to calculate this at tax time.
Children working for you
If you are the sole proprietor of your small business and you employ your own child under 17 that child can make up to, 850 and avoid paying any taxes. You will not have to pay Social Security tax and the salary you can write off as a business expense. This same policy applies if you and your spouse are together in partnership and there are no other partners. It does not apply if you are a corporation.
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Home Business Tax Deductions ? 3 Deductions That Could Save You 00s
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Let’s face it, very year millions of Americans are over paying on their taxes and they do not even realize it, their losing money by not obtaining all the appropriate simple tax deductions which are provided to them by good old Uncle Sam. In this article we are going to cover how you can use your home business as a way of acquiring the tax deductions you deserve.
Home Business Tax Deductions 3 To Help You Save
This can be one of the bigger tax deductions, but if you plan on claiming this deduction, you can only use your home office exclusively for your business. If you’re using your office for anything other than for your home business, you can not claim this deduction.
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