Many home-based business owners aren’t savvy in the ways of the IRS. Many deductions and exemptions can save entrepreneurs money, and they have no idea. It’s good to have a knowledgeable tax preparer to guide you through the maze of forms. If you don’t, many money-saving options can be overlooked. Here are some basic deductions for any home business.
The Home Office Itself
The IRS is strict when it comes to designating a home office as a place of business. (1) The business must be legitimate; (2) The space must be used as your principal place of business or for specific business purposes, like meeting clients or doing paperwork related to your business, and (3) the space must be used “regularly and exclusively” for business. That means it can’t be a back bedroom with a desk.
If you conduct any business using your cell phone, both the cost of the phone and your phone service provider are deductible. If the phone is also used for personal purposes you can still deduct the portion used for your business from your taxable income.
Since an Internet service is technically a necessity if you work at home, you can deduct some of the internet expense when it comes around tax season, even if it is used for home and business. You may deduct most of the expense if your internet use is exclusively for your business.
Computers and Software
Technology is always about upgrading. Those upgrades are considered an essential business expense. New computers and new software versions are part of conducting business in the modern world. Every new computer purchase and software upgrade can be deducted as a business expense. You can even save on your tax software. Go to Turbo Tax and get this money-saving coupon on tax services.
The Cost of Keeping Updated
Along with new technology, you also must stay well informed to changes to your business, as well as the latest business technology that’s available. Online courses, seminars and other training programs that you pay for can be deducted as an expense for maintaining expertise within your given field.
We forget how much printer ink and paper we may use in a year. But every ball point pen and paper clip is a tax deduction for your home business. Keep a list of used supplies throughout the year and make sure you are not missing out on all the deductions you have coming to you.