Tweet

Save Money On Your Taxes By Working From Home

Written by: Chris Simpson

Article Overview: You know that working from home can be satisfying but did you know that it could also save you money? Beyond the obvious savings like commuting costs, clothing and such you can also take considerable savings on your income taxes.

Save Money On Your Taxes By Working From Home

You know that working from home can be satisfying but did you know that it could also save you money? Beyond the obvious savings like commuting costs, clothing and such you can also take considerable savings on your income taxes.

Home Deductions

When you work from home, there are tax deductions that you can take for using your home for business. There are sometimes complex rules that govern the use of these credits. Let's look at some potential savings and a few of the regulations surrounding them.

- Office- If you operate a business from home chances are you have an office. You are allowed to depreciate the office portion of your mortgage or rent. Your office must be entirely separate from the rest of the home and be used exclusively for work and or meeting clients or patients.

If your office meets the guidelines, calculate the deduction by getting the percentage of space your office takes up. For instance, if your office is 20% of your home's total square footage, then you will be allowed roughly 20% of your mortgage as a deduction.

- Business Use of Home- In addition to the home office mortgage deduction you can also deduct repairs, insurance and utilities. This deduction is a little trickier as you will need to determine if it is a direct or indirect expense. The resulting deduction will be a percentage based on this information. It is important that you seek professional assistance as these forms and calculations can be complex.

More Deductions on Schedule C

While the deductions you can take for your home office can be substantial, there are also everyday business expenses that you can claim on schedule C.

- Supplies- Anything that you use exclusively for business can be deducted as an office expense. Paper, staples, envelopes, and even stamps can all be calculated on your schedule C. You need to keep good records and even receipts in a separate file. When you do your taxes, you may not be required to show them; however, you will need them for a potential audit.

- Advertising- Need to get the word out about your home business? Your advertising dollars are deductible.

- Employee Expenses- Obviously you can deduct your employee's wages, but you can also deduct employee benefits.

- Meals- Certain meals are tax deductible if they are work-related.

- Employ your Children- Are you giving your bundle of joy an allowance every week? Why not "employ" him or her and be able to deduct it on your taxes? This will mean they actually must do some work, empty the trash, and clean the office or if they are older file paperwork.

Anything that pertains to business that they are qualified to carry out is an opportunity for you to employ them. Not only are you saving money with your home based business, you are teaching your children a vital lesson about working and earnings. Money savings with a moral bonus; what could be better than that?

Working at home has many benefits; you have the freedom of setting your own hours and doing what you love. While you are in this pursuit of happiness, do not overlook the many ways you can save money. Uncle Sam has made many provisions to make it more profitable for the home based business owner.

Related Articles
  Over 65 Exemption Portability
  Small Business Taxes In The US
  Planning Next Year's Home Business Taxes Now
  Self-Coaching Tip: Enjoy Doing Your Taxes
  Income Made and Taxes Paid by the Rich

Article Tags: business expenses, business from home, envelopes, home deductions, income taxes, insurance, money, mortgage deduction, office expense, office portion, professional assistance, receipts, schedule c, square footage, stamps, staples, tax deductions, working from home



Related Forum Posts
Re: What is Your Favorite Thing About Owning A Business? - [quote="freddyb45":1t3lpfi8]For me it's the fact that all the time and effort you put in is worth a lot more, due to it making you "business" more profitable. Working for yourself is also a positive, although employing people you can trust is quite different.[/quote:1t3lpfi8] I like this idea. Working for yourself means you are investing in your own future, not someone else's, although there is value in working for someone else first to gain experience and confidence. Working for yourself does not automatically mean success, fame and fortune. For most entrepreneurs, it takes much work and dedication to get to the point of financial success and comfort - sometimes years. But the benefit is, again, you know you are investing in yourself and building equity for your own future. GT :-]
Re: Which would you start: a Blog or Online Community? - It is a difficult decision to make. Lets start it this way - What are you more interested in? Money? or Friends? or Both? If its purely Money, then Blog might be an appropriate answer. But consider this - It will be people (visitors) that will bring traffic to your blog and then Money will follow. This will be possible after a time and during this time it will be your friends who will be the starters. If you are looking for friends only, then its true that not many will be interested in knowing how you have beaten them in the game or the other way round. So it will be preferable to have a Forum where they can share ideas with you and others. But you can share your insider knowledge with them and invite comments from your Blog. You can also put up information on what others (including your friends) don't know about Tennis. The blog you create can provide News, Inside Information and also Techniques that can be used by the new entrants in the world of Tennis.
Making Money in 2011 - Hello forum members! As we draw closer to the new year I thought it would be appropriate to change the title of our forum category "Making Money in 2010" to "Making Money in 2011" - I'm looking forward to some interesting discussions and wish everyone a prosperous New Year!
QuickBooks vs. Microsoft Money vs....? - I have always used Microsoft Money to run my business - accounting, invoicing, etc. It came with my computer when I got it and integrated well with my online banking system so everything is a breeze. It only takes 30-60 minutes every quarter to do the bookkeeping (keep in mind that I have a very simple business - no inventory, very little invoicing, I do all my payments by credit card, etc). Is QuickBooks or Money the best accounting tool for small business owners? Or is there something even better?
Re: Trade Shows - Are They Worth It? - HI, I have used trade shows (not participated) to collect potential clients. For example, the Home & Garden Industry is extremely behind the time in regards to their websites. I attended an Home & Garden Expo in Denver and collected all the companies contact information. I plan on cold calling & mailing information to each business. It also gave me time to research the industry more, talk directly to the owners in many cases, and learn more about what they need. Jeff


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Convening a focus group for a niche product

Are You Fulfilled

How to Ask for a Flexible Work Arrangement

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.