Home Based Business Tax Savings?

1 Answer

Answer :

A home based business is an ideal way to make extra income or to start a new enterprise. The good news is the IRS allows for a variety of tax deductions on home based businesses. Visit IRS.gov for a list of specific criteria and deductions that may apply to your home office or business. Tax forms for home based business deductions can be downloaded for free from the IRS.gov website. Listed here are a few of the more common tax deductions for home based businesses.Operating CostDeduct a percentage of how much your home based business is costing you annually for utilities, physical maintenance, space used in your home for the business, and salaries to staff or family members. Postage and soft goods like printer paper are also part of operating cost.EquipmentEquipment used to provide your services or to produce your products can be deducted. The list includes computers, phones, fax machines, scanners, and other standard office equipment. Office furniture, shelves, and other similar items also qualify as equipment. Monetary values for equipment are based on the depreciated age of each item, and it is expected these values decrease with age.MarketingAdvertising cost and money spent to market your goods or services are deductible. Professional membership fees and paid promotions that support your business also fall into this category; as do business cards.TravelTravel cost for business purposes include gas, parking fees, auto insurance, mileage, and maintenance. Travel cost by air, rail, and bus also qualify for deductions. Expenses related to business travel like dining, entertaining clients, and for professional training may also qualify as home base business tax deductions.Note: Save all of your home based business receipts. The criteria for what qualifies as a home base business is not cut and dried. What may qualify as a home based business deduction for a home day care center may not apply to a small craft business (which the IRS may consider to be a hobby).

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