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Home Office Expenses: Demystifying Tax Deductions

 

If you run a business from a home office, you may have questions about tax deductions when April rolls around. How much of your business expenses can qualify as a tax write-off and what other deductions might you qualify for? This guide can help you determine what tax deductions your business is eligible for and save you lots of money in taxes.

Supplies and Equipment

Any supplies, equipment or furniture that is used solely for business purposes can qualify for a tax deduction. If you have a computer and printer and can prove that they are for business use only, you can get a tax deduction on them. If you have desk and office chairs, which were purchased specifically for a business den, there's another deduction. Make sure you keep all your receipts when purchasing supplies, equipment or furniture for business use.

Software and Subscriptions

Any software on your computer and subscriptions that are for business use are eligible for a deduction. For instance, if you're running an at home graphics business, your copy of Photoshop may get you a tax deduction.

Traveling

Perhaps surprisingly, a good portion of business related travel is 100 percent tax deductible. If business reasons cause you to travel, every bit of money that goes to transportation, hotels, dry cleaning and rental cars is completely tax deductible. The one exception: meals while traveling for business purposes are 50 percent deductible.

Insurance

If your at home business means that you are self employed, your health insurance premiums are 100 percent tax deductible, provided that certain conditions are met: deductions cannot exceed the net profit of your business, and you can't be eligible for any other form of health insurance.

Social Security

People who are self employed pay twice the Social Security costs as others since they are both employer and employed. However, you can take half of your contribution back through your 1040 tax form.

Transportation

If you've used your car for business purposes, such as making home deliveries, meeting clients or picking up packages, you can get a tax deduction. Make sure you keep careful and accurate track of your mileage by date, as well as any applicable tolls and parking fees. Your reason for the trip must also be specified.

Telephone Bills

If you have a telephone plan in which you pay by the minute, your business related calls can be deducted. Keep track of the date, time, purpose and length of all your business calls and add up the minutes to deduct from your taxes.

These are only a few of the tax deductions that may be available to you as an at home business owner. In general, it's a good idea to keep a record of everything that could possibly qualify as a business expense in any way - date, time, purpose, cost to you and applicable supporting documents - since the majority of these expenses are in fact tax deductible. By keeping track of every little expense incurred on behalf of your business, you can save a lot of money in taxes.

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