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Tax Deductions For

The Home Business Owner

 

Tax time can be one of the most anticipated periods of the year. After the holidays have become a memory and before the fun of summer begins, we must devote several hours of our lives to completing this project. This can be especially challenging for the home based business owner. There are several deductions that are available for the work from home individual. These ideas can help reduce your tax burden.

1) Accountant Costs
If you use the services of an accountant, these costs are totally deductible for a work at home business.

2) Advertising Costs
Any amount of money that is spent to advertise an internet business is tax deductible. Business cards, flyers, newspaper ads, internet ads, etc.

3) Bank Fees
All of the bank costs incurred to run a home business are tax deductible.

4) Research And Training Materials
Any educational materials purchased to increase your expertise for developing, maintaining and improving a home based business are a tax deduction. This includes software and E-books.

5) Internet Service Provider
Keep a log of the business hours spent online and personal time on the internet. The business percentage can be taken as a tax deduction against ISP costs per month.

6) Web Hosting Fees
The monthly costs paid to a web host provider for managing an internet business site are deductible.

7) Long Distance Telephone Costs
Keep an accurate account of the amount of money spent for long distance phone calls that relate to a home business.

8) Office Equipment
Your computer, printer, fax machine, answering machine, scanner, furniture, remodeling, etc. are tax deductible when used for a home based business. Some people choose to depreciate the cost over several years or take the entire expense at one time. Your tax situation will determine the decision.

9) Shipping Costs
If you ship products, the amount of money spent for boxes, tape, packing peanuts, bubble wrap, etc. is tax deductible. If you use a personal car to transport packages to the post office, keep a log of the distance traveled.

10) Office Supplies
Paper, stationery, folders, pens, pencils, tape, envelopes, printer ink, address labels, post-its, postage stamps etc. that are used for the operation of a home business are a deduction.

11) Interest Expenses
All of the interest accumulated on credit cards for the development, maintenance and improvement of a home based business is a tax deduction. If you have any loans that were taken out to start a home business, this interest is also tax deductible.

12) Office Space
Rent, taxes, mortgage interest, utilities, phone etc are partly deductible. The area devoted to a home based enterprise must be used exclusively for business purposes and the deduction can only be a percentage of the total house costs based on the amount of space the home business uses. Using one room for an office and another room for packaging your products creates a tax deduction for both rooms.

This is not an all inclusive list of tax deductions for your home business. The IRS has a publication (IRS publication 587: Business Use Of Your Home) that clearly defines all of the allowances that you can take. The best approach for completing your tax return is keeping accurate records. The idea of sacrificing several hours of your time for calculating taxes is not very exciting. Unfortunately, it is a task that all of us must face. Good record keeping within the guidelines of these ideas will develop more time for yourself and less time for the IRS when you begin your return.

"The way to get ahead is to start now."

 

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TURCOTTE ENROLLED AGENT LTD 

Albert E. Turcotte, Jr., EA, MST
603 Great Rd, North Smithfield, RI 02896
Phone: 401-766-5536 | Cell: 401-692-0291
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