Home Office Tax Expenses

Home Office Tax Expenses



Home Office Tax Expenses
Self-employed individuals often work out of​ their own home .​
If this is​ the​ case with you,​ here’s a​ primer on​ home office tax expenses you​ can claim on​ your taxes .​
Home Office Tax Expenses
America is​ a​ country built on​ small businesses .​
Yes,​ the​ big companies are the​ darlings of​ the​ media,​ but the​ guts of​ our economy are the​ little guys pursuing the​ American Dream from the​ extra bedroom .​
Fortunately,​ the​ tax code contains deductions tailored to​ help cut your tax bill .​
When claiming home office tax expenses,​ it​ is​ important to​ keep a​ receipt for each and every amount you​ are claiming .​
When dealing with the​ IRS,​ receipts are your ammo .​
Keep them at​ all costs.
When maintaining a​ home office,​ taxpayers often wonder how they differentiate a​ business expense from a​ simply home expense .​
The key is​ the​ square footage .​
Simply divide the​ square footage of​ your office by the​ total square footage of​ the​ home .​
This number is​ typically represented by a​ percentage such as​ 20 percent .​
Put another way,​ the​ home office represents 20 percent of​ the​ square footage of​ the​ house .​
Once you​ have the​ above answer,​ you​ can multiply it​ by the​ total yearly amounts paid for rent or​ mortgage interest,​ insurance,​ maintenance,​ utilities,​ taxes,​ depreciation of​ the​ home and repairs .​
Each of​ these home office tax expenses figures can then be deducted .​
In addition to​ the​ above,​ you​ can also deduct expenses completely related to​ the​ business .​
For instance,​ the​ purchase of​ a​ desk for the​ office is​ entirely attributable to​ the​ office and can be deducted in​ full .​
Words of​ Caution
There are some limitations to​ home office tax expenses .​
If you​ are reimbursed by an​ employer for various home office expenses,​ you​ cannot also claim those expenses as​ a​ tax deduction .​
Sorry,​ no double dipping .​
For some time,​ there has been an​ urban myth that the​ Internal Revenue Service keeps a​ close eye on​ home-based businesses .​
This may have been true ten years ago,​ but is​ clearly not the​ case today .​
To this end,​ the​ IRS has actually come out and issued clear statements to​ the​ contrary .​
Do not fail to​ claim home office tax expenses because of​ a​ fear of​ an​ audit .​
It is​ simply not a​ rational fear!
Running a​ small business can be both stressful and incredibly gratifying .​
Make sure you​ claim home office tax expenses to​ help your cash flow.




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