Don't Mess with the IRS

It is that time of year again to get organized to prepare our taxes.  Most of us know that home businesses offer many tax benefits.  If you’re just starting out, however, you may be unaware of a few of the great deductions most of us can take.

I am not an accountant or CPA.  My suggestions may not be applicable to you. They may well be, but be sure to speak with a tax advisor prior to taking home business tax deductions.

Here are just a few of the deductions that can save us much more money than we would have if we worked a j-o-b.

The home office deduction is not limited to a full room. Your home office can be part of a room. Measure the area where you conduct your business and divide that by the square footage of your entire home. That percentage is the fraction of your home-related business expenses (rent, mortgage, insurance, electricity, etc.) that you can generally claim on your taxes.

To qualify as a “deductible home office,” the following criteria must be met.

·        Your home must be your principal place of business (or a place where you do administrative chores, such as scheduling and recordkeeping, and you have no other fixed business location); or a place to meet or deal with customers or clients face-to-face on regularly.

·        You must use the space you claim regularly and exclusively for business (with a couple special exceptions I will not address here). So, you cannot claim your kitchen table as your office desk if you feed your family at that table.

You can deduct the business and office supplies you buy. Maintain receipts for these expenses, and they may offset your taxable business income.  Office supplies include pens and paper; however, they can also include office-furniture, computers, scanners, etc. You can take these large deductions all at once in the year of purchase, or you can deduct a percentage of the cost spread over seven years.  Consult a tax advisor before claiming these deductions to be certain you do so correctly and legally.

Business mileage may be deductible.  Miles driven to and from your office (a job or your small business office) are NOT tax deductible, however, miles driven exclusively for your business, along with tolls and parking costs may be.  Keep a log to record these expenses and the purpose of each trip in your vehicle to document the expenses.  There are two different ways to claim these deductions, so again, ask your tax advisor.

Small-business travelers can deduct the entire cost of a hotel, transportation – air, auto or rail, and even costs incurred during the trip such as car rental and tipping a bellhop.  A portion of the meals you eat during business travel is deductible.  Save documentation for all travel expenses.

Self-employed health and long-term care insurance premiums may be 100% deductible, but there are limitations to which you must adhere.  Business and industry-related magazine subscriptions can be claimed as well.

One tax DISadvantage for self-employed or small business owners is that you must pay double the Social Security contributions. Federal law requires employers to pay half and employees to pay the other half. As a home business owner, you are both.

There are many more home business deductions than I can include here.  Take advantage of all legal deductions available to you, and your cost of doing business may be greatly reduced.

========================

For affordable discount plans to reduce your Health and Dental expenses AND reduce costs on Hearing, Vision, Prescriptions, Roadside Assistance, Lifelock™ and even more, visit: http://ibourl.net/XpressSavings (NOT insurance). 

For Xpress Healthcare® business opportunity info, visit http://joinxpresshealthcare.com.