Tax
Benefits Home Business
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Tax Advantages of a
Home-Based Business
The benefits of running
your own successful business from home
are vast. From the independence of
working for yourself to making better
income, there are many reasons for
starting a home-based business
You can
claim almost everything you spend on
your home business. The expenses that
you incur on your home based business
are tax deductible but, tax laws may
vary depending on where you live.
More on Home Business Tax Deductions
The
business portion of your home. What
business portion means is how much area
of your house you use it for doing home
based business.
The principal place of business for your
trade or business;
The place where you meet and deal with
your patients, clients, or customers in
the normal course of your trade or
business, or the home office must be
your principal place of business (unless
it is not attached to your house).
Deductions also may be taken for regular
use of a residence for the provision of
day care services or for business
storage purposes; exclusive use is not
required in these cases. You also may
take deductions if you rent out your
residence. For more information, see
Publication 587
When figuring the amount you can deduct
for the business use of your home, you
can use the entire amount of expenses
attributable solely to the portion of
the home used in your business.
The
amount you can deduct for expenses
attributable to the whole house depends
on the percentage of your home used for
business. To figure this percentage, you
may divide the number of square feet
used for business by the total square
feet in your home. You
figure the business portion of your
expenses by applying this percentage to
the total of each expense.
If you are a
qualified day-care provider who does not
use any area exclusively for day care,
your business portion is further limited
by the ratio of the number of hours the
area is used exclusively for business to
the total number of hours the portion
was available for any use.
If your gross income from the business
use of your home is less than your total
business expenses, your deduction for
certain expenses for the business use of
your home, other than mortgage interest,
taxes, casualty losses, and the like is
limited. However, those business
expenses that can not be deducted
because of the gross income limitation
can be carried forward to the next year
but will be subject to the deduction
limit for that year.
Many
small businesses let themselves get
cheated every year by not taking
deductions they are legally entitled to
on their taxes for fear of being
audited. As long as you stay within the
IRS guidelines for what is and is not
tax
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