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Business Tax Deductions
Deductions
for Home Business Expenses
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IRS Topic 509 -
Business Use of Home
You may deduct expenses for business use
of your home, whether you are self–employed or are an
employee, you may be able to deduct
certain expenses for the part of your
home you use for business despite the
general denial of business expense
deductions for the home.
To deduct
business expenses, part of your home must be used
regularly and exclusively for business:
Deductible expenses for business use of
your home include the business portion
of real estate taxes, deductible
mortgage interest, rent, casualty
losses, utilities, insurance,
depreciation, maintenance and repairs.
You may not deduct expenses for lawn
care in general or for painting a room
not used for business.
You may
be able to claim the a portion of the
following:
-
Electricity
-
Home
Insurance
-
Internet
-
Maintenance and repair
-
Mortgage Interest
-
Property Taxes
-
Rent
-
Telephone
Apart
from claiming the above, you may be able
to deduct the expenses incurred
with regard to your home business, such
as:
-
Advertising costs.
-
Business travel expenses
-
Equipment purchase for business,
such as a computer.
-
Meals
and entertainment for business
related reasons.
-
Office supplies such as printer,
cartridges, paper etc.
-
Transportation
expense of getting to and from your
clients.
-
Moving Expenses, the business
portion of moving.
-
Phones and Communications
business portion
-
Meals and Entertainment
If you take a client or prospective
client out to lunch and talk about
your business.
-
Tax Preparation Expenses
Though not specific to home-based
businesses, the expenses that you incur
to have your tax return itself prepared
may be tax deductible.
-
Software used for business purposes.
-
Educational expenses incurred
directly to learn industry-specific
skills needed for your business.
-
Record Keeping
You can
also deduct a spouse and children for
your home based business if you employ
them. You can set up a pension plan
while operating a home based business.
You can also deduct the losses you have
incurred based on the circumstances.
Tax advantages are one big benefit that
you will enjoy with a business run out
of your home.
Building-Related Expenses
Repairs and improvements to your home
office related directly to business are
completely deductible.
Deductions base on home
business square footage include:
-
Mortgage interest
based on the square footage of your
home office.
-
Property taxes paid for your home
qualify at the same percentage.
-
If you own your home, you
can depreciate the appropriate share of
the home over 39 years.
-
Security devices and monitoring fees as
a percentage of the protected area used
for business.
-
Insurance percentage, as with
mortgage or rent expenses.
-
Utilities
using the same percentage.
You can
only deduct 50% of the cost of meals and
entertainment.
More on deductible business expenses
Where the exclusive use requirement
applies, you cannot deduct business
expenses for any part of your home that
you use for both personal and business
purposes. For example, if you are an
attorney and use the den of your home to
write legal briefs and also for personal
purposes, you may not deduct any
business–use–of–your–home expenses.
Further, under the
principal-place-of-business test, you
must determine that your home is the
principal place of your trade or
business after considering where your
most important activities are performed
and most of your time is spent, in order
to deduct expenses for the business use
of your home.
Get more information here
IRS Topic 509 - Business
Use of Home
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