Household expenses are part of your deductions and need to be tracked when you work at home. The way you track and deduct them is essential to claiming and filling out your taxes correctly. You claim with a standard 1040 and can filed married, single or married filing separately depending on the benefits each would allow. If you're married and have children, filing married is usually your best bet, especially if your husband has been paying taxes all year.
Determine Your Cross-Over Expenses
Because you work and live in the same domain, there will be cross-over expenses. The key is to determine which of them actually apply to you. Regardless of your business, your rent/mortgage is an expense. You may also qualify electric/power, phone, Internet, mobile phones, water and other utilities as expenses.
Track Entire Expense Bills and Payments
Though your use of these expenses are not entirely for your business, you need to track them as if they are and when you file at the end of the year, it will calculate down to the actual expenses for your business. For example, if your rent/mortgage is $895, you need to put the entire $895 into your expense records for the month and record when that entire amount is paid. This style of recording will probably make you look in the red for most months.
Expenses like daycare have a duel purpose and can be deducted in a couple of different ways. If you utilize daycare for anything having to do with work, you can generally deduct it from your household expenses. This applies whether you leave the house or not. If you're working at home and need someone to care for your children while you sequester yourself in your office, you can deduct the expense from your taxes.
There are a number of benefits to make your house more energy efficient. One of those benefits is the ability to deduct the expenses from those renovations on your taxes. Some of the most common deductions made in this area are insulation, windows, roofing, solar energy sources and vehicles.
There are often household expenses that many have no idea can be deducted from your taxes. Take the time to go over your previous year tax records to see if you missed anything. You may find there are a number of things you missed that you could also be deducting this year. Tax laws and information are many and can be confusing, this is how deductions are missed and you could be missing out on more money in your pocket.
Household expenses can be deducted on your taxes in a variety of different ways. It's important to know which expenses you can deduct, how much of those expenses and how to fill out your filings appropriate for maximum deductions. Always consult with a tax professional if you have any questions about deducting household and other expenses.