Forum Thread

A Way For Home Businesses to Simplify Tax Deduction

Reply to ThreadDisplaying 4 Posts
  • Are you sure you want to delete this post?
        

    I wanted to throw this out there from the IRS's site itself. So, this is coming straight from the horses mouth. This would be for anyone who has a small home-based business. If you want to simplify your tax deductions without having to fill out that 43 line form, then this might interest you.

    Granted, there is a cap of $1,500 (based on $5 a square foot for up to 300 sq feet) but if you have a small business in the first place, this just might be the ticket. This would definitely help take the sting off of paperwork and record keeping. Instead of the large form filling, the number crunching and depreciation mumbo jumbo, all you have to do is fill out a worksheet if you are choosing the simplified method. Once done, plug the results into your tax return.

    Keep in mind that homeowners using the simple method cannot depreciate the portion of their home used in a trade or business. What they can claim is real estate taxes, casualty losses on the home as itemized deductions, as well as mortgage interest. Also, expenses such as advertising, supplies and wages paid out to employees are fulling deductible.

    Does anyone out there have a small business that would qualify for this? If so, it would be great hearing your take.

  • Are you sure you want to delete this post?
        
    JFoster Wrote: Does anyone out there have a small business that would qualify for this? If so, it would be great hearing your take.
    I work from home, but don't qualify for this because I don't own a small business. It would be nice if they allowed this for all private contractors who work from home and not just those who own a business.
  • Are you sure you want to delete this post?
        

    Well I work from home and have been advised by multiple tax consultants to partially write off a portion of my home/apt because I have a dedicated office area. That's the key though, needs to be a dedicated office, where you can realistically claim and justify only using that square footage for work.

    But you can get a small write off by doing so, if you solely work from home. Hope that helps; it's at least worth inquiring about with your tax consultant.

  • Are you sure you want to delete this post?
        
    J.K.Logic Wrote:

    Well I work from home and have been advised by multiple tax consultants to partially write off a portion of my home/apt because I have a dedicated office area. That's the key though, needs to be a dedicated office, where you can realistically claim and justify only using that square footage for work.

    But you can get a small write off by doing so, if you solely work from home. Hope that helps; it's at least worth inquiring about with your tax consultant.

    Oh, and you can also write off all home expenses that come with having that dedicated office, by %. For example, if your home office takes up 20% of your total sq footage (or whatever the #) you can also write off that percentage of your -- utilities (like electric/gas/water, etc) and internet and cable too, especially if you use that in any way for work. Again, it's % based. But you can take advantage of many smaller write offs that will help your bottom line of what you owe. Here's a good breakdown, that at least includes what I'm talking about, plus a few more little known tax deductions ----

    Of course I should probably add as a disclaimer to talk to a tax professional first, especially if you do your own taxes, before you just start writing stuff off. Just to make sure that you are doing it in compliance, and that you do actually qualify.