By Karin Workman
Do You Qualify For Home-Based Tax
Deductions?
New changes in the tax laws have made it
easier than ever to claim Home Office Deductions and keep
more of what you earn.
If your home is a place of
business, many of your personal expenses can be deducted
as business expenses resulting in lower taxes.
You
may be thinking, "I have an Accountant/CPA/Tax
Preparer/Tax Software who knows all about tax deductions
so I don't have to know anything about them."
There are several reasons why that thinking could be
costing you thousands of tax dollars. Some of those
reasons are:
·Most Accountants/CPA's/Tax Preparers do
not "specialize" in Home-Based Businesses and do not keep
up with the ever-changing laws pertaining to them.
·You are ultimately responsible for knowing what you
can and cannot deduct as business expenses. Why? YOU are
accountable to the IRS for your deductions, not the tax
preparer.
··If you pay someone to do your taxes
you still need to know what you can deduct so that you can
gather all relevant paperwork.
··The most
compelling reason: Getting the greatest benefit from your
deductions.
To qualify for these deductions you must
meet 2 conditions, which most, if not all, Internet
Marketers meet.
Condition 1: Do you work as an
Internet marketer out of your home (on your "home
computer)?
To qualify for deducting expenses related
to using a workspace for business in your home, your home
must be
Your "principal place of business " or you
must use the space only to earn your business income.
·Use it on a regular and ongoing basis to meet your
clients, customers, or patients.
AND
Condition 2: Are you in business to make a
profit?
Whether you made a profit or not is immaterial.
Even if you lost money but intended to make a profit these
deductions are still available to you.
If you
answered yes to both of these questions then you do own a
Home-Based Business and as such you are qualified to
deduct Business Assets, Direct and Indirect Expenses.
Business Assets include business equipment such as
computer, fax machines, business furniture such as desk
(your dining room table for instance), desk chair and
filing cabinets. These are 100% deductible if they are
used "exclusively" for business purposes.
If these
assets are not used "exclusively' for business the amount
you can deduct is proportionally related to how much these
things are used in your business. It is possible to deduct
a portion of your living room, sofa, DVD player etc if you
meet certain conditions.
Direct Expenses are those
directly related to conducting your business. This would
include office supplies, telephone service,, cellular
phones, ISP service, hosting, advertising etc. Direct
expenses are generally 100% deductible.
Indirect
Expenses include such things as rent on your home,
utilities including heating and air conditioning and
general repairs such as replacing a roof or repainting the
exterior of your home.
These are authorized legal
deductions passed into law specifically for Home-Based
Businesses by congress.
If you use your home for
business purposes, many of your personal expenses can
legally be converted into deductible business expenses
including utilities such as heat and electricity, cleaning
materials, house insurance and property taxes.
Learn all you can about what you can deduct and you
will consistently save thousands on your income tax each
year.
"I'm proud to pay taxes in the United States;
the only thing is, I could be just as proud for half the
money." -Arthur Godfrey
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About the
Author |
©2004 By Karin Workman, A 30-year
veteran Home-Based Business Owner who specializes in Tax
Preparation for Home-Based Businesses. Karin also wrote
the Hot New Ecourse: "Reap the Rewards!" Designed to help
you save tax dollars and put more money into YOUR pocket.
The course is Free so do yourself a favor and subscribe
today. http://reaptherewards.businessoppsunlimited.com
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