Tax season is here once again and if you are in a home based business, you will want to know ALL your tax advantages and write-offs…
I strongly recommend getting in touch with an account that specializes in small business taxes.
But here are a few home business tax advantages and tax write offs for operating a business out of your home or out-building…
You must use a specific area of your home for your home based business on a continuing basis.
The term home can mean a house, apartment, condominium, mobile home, boat or even a tent – lol!
It also includes structures on the property such as an unattached garage, studio, barn, or greenhouse.
The business part of your home must be one of the following:
- Your principle place of business…
- A place where you meet with patients, clients, or customers in the normal course of your business..
- A separate structure not attached to your home you use in connection with your business.
The space does not need to be marked off by a permanent partition…(in my case, I have to have it partitioned off, as I have four kids at home yet, so my main office is in my bedroom, behind closed doors for the sake of privacy – 🙂
Here are a few examples
If you use your family room to work your home based business and you also use it for your family use, you can not claim a business deduction for its use…
Having a Home Business in a Garage or Outbuilding
Penny’s shop is located in her garage which is not attached to the house. She uses the garage for her jewelry business only.
In one part of the garage she puts her machines and worktables and inventory of gems and metals. In another part of the garage is a small showroom.
She is allowed to claim a deduction for the business use of her garage.
The use is exclusive, regular, and for the business.
Also, the garage is a principle place of business and is a separate structure…Penny is allowed to claim a deduction for the business use of her garage. The use is exclusive, regular, and for the business.
Also, the garage is a principle place of business and is a separate structure…
Peggy has her home business in her home office…
She is allowed to take a deduction for the business use of her home.
The rooms in her house are all about the same size. There are ten rooms and she uses one for an office.
Peggy’s business use percentage is 10%….She can deduct 10% of her utilities, rent, mortgage, etc…
Recordkeeping is vital when you have a home business….
- You must keep accurate records that provide the information needed to figure your deductions for the business use of your home.
- Keep all cancelled checks, receipts, invoices, and other evidence of expenses for the deductions you claim…
- Keep a well kept log of mileage used for business. Anytime you make a trip to the P.O., bank, or anywhere for your business, log the miles!
These are just some bits and pieces of info that I have picked up on getting more home business tax advantages and tax write -offs for running a home business from your home…
No one wants to pay Uncle Sam more than his share!