- Like
- Digg
- Del
- Tumblr
- VKontakte
- Buffer
- Love This
- Odnoklassniki
- Meneame
- Blogger
- Amazon
- Yahoo Mail
- Gmail
- AOL
- Newsvine
- HackerNews
- Evernote
- MySpace
- Mail.ru
- Viadeo
- Line
- Comments
- Yummly
- SMS
- Viber
- Telegram
- Subscribe
- Skype
- Facebook Messenger
- Kakao
- LiveJournal
- Yammer
- Edgar
- Fintel
- Mix
- Instapaper
- Copy Link
Nowadays, it is more common than ever for small business owners to be working from home. With a huge number of people using the web to do business, along with communication tools like Skype or FaceTime that allow for video conferencing from almost anywhere, more self-employed professionals continue to discover the fantastic benefits of a home office. Plus, there is another nice financial benefit they can take advantage of – the home office deduction.
RELATED: What Qualifies for a Home Office Tax Deduction?
Business owners can write off the expenses tied to using a home office when it is directly utilized to conduct business activities. According to IRS terminology, this is popularly referred to as the home office deduction. Although the term “home” is involved, this deduction is applicable to individuals using a portion of any residence, whether it’s a one-bedroom apartment in Albuquerque or a 10,000-square-foot mansion on the Jersey Shore. Because of this, the write-off is available to both homeowners and those who rent.
In basic terms, the amount you’re allowed to deduct depends on the percentage of your residence that you utilize for your business. Deductible expenses typically include mortgage interest, insurance, rent, power, home repairs, depreciation, and even cable or Internet access if you use these services for business activities.
There are several factors at play in determining how an entire room or just a small space of your residence can be written off. This designated area has to be your primary place of business or a space you use to deal with clients or patients when meeting with them face-to-face. You could also have a separate structure that is part of your home but isn’t attached to it. Such a structure can be considered part of your home office if it is utilized for a business. If you run a daycare out of your residence, you can claim it as a deduction as well, even if you use the space for the daycare for other purposes during off-hours.
RELATED: 5 Commonly Missed Tax Deductions for Small Business Owners
In 2013, the IRS introduced a simplified write-off method for claiming the home office deduction. Using this alternative method, small business owners who work from home can claim $5 per square foot for up to 300 square feet of office space within a residence. But make note of the limit to this flat-rate option as the maximum amount you can write off is $1,500.
With two unique home office deduction options available, it is certainly worth exploring both options to maximize this tax-saving opportunity. The regular method involves doing lots of recordkeeping and documenting of expenses, which is the main reason the IRS now offers the simpler, flat-rate option. But this newer option may not be as financially beneficial to those residing in areas where the cost of living is above average.
If you are one of the millions of proud small business owners out there pursuing your professional passions, you are highly encouraged to look into all possible tax deductions and tax credits you qualify for to help you keep more of your hard-earned money. Other deductions include the vehicle deduction, the meals and entertainment deduction, and deducting healthcare costs for self-employed individuals.
Recommended Books on Home Office Deduction:
- Small Business Taxes Made Easy, Second Edition
- MLM ‘HOME-OFFICE’ TAX DEDUCTIONS are HUGE! (Tax Breaks for Network Marketers Book 3)
- J.K. Lasser’s 1001 Deductions and Tax Breaks 2014: Your Complete Guide to Everything Deductible
- 100 Tax Loopholes and Tax-Write Offs for Home Based Businesses: Save Thousands in Taxes
- Home Based Business Tax Deductions
- Like
- Digg
- Del
- Tumblr
- VKontakte
- Buffer
- Love This
- Odnoklassniki
- Meneame
- Blogger
- Amazon
- Yahoo Mail
- Gmail
- AOL
- Newsvine
- HackerNews
- Evernote
- MySpace
- Mail.ru
- Viadeo
- Line
- Comments
- Yummly
- SMS
- Viber
- Telegram
- Subscribe
- Skype
- Facebook Messenger
- Kakao
- LiveJournal
- Yammer
- Edgar
- Fintel
- Mix
- Instapaper
- Copy Link