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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
About the Author
©2004 By Karin Workman, A 30-year veteran Home-Based
Business Owner who specializes in Tax Preparation for
Home-Based Businesses. Karin also wrote the Hot New Ecourse:
"Reap the Rewards!" Designed to help you save tax dollars
and put more money into YOUR pocket. The course is Free so
do yourself a favor and subscribe today.
http://reaptherewards.businessoppsunlimited.com
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5 Tax Rules That WorkForbesBut at risk of breaking my personal rule not to impose them, you will find five tax-driven directives that I am able to endorse but for a few anomalous circumstances. In my previous post, I called upon the mantra “Don't let the tax tail wag the dog!and more » |
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COLUMN-Taxes: How low can you go?-Chrystia FreelandReutersBy Chrystia Freeland NEW YORK May 24 (Reuters) - Are your taxes too high? When Gallup asked that question in April, tax month in the United States, 46 percent said they were. An additional 47 percent said their taxes were "about right. |
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