Tax Deduction Consulting: Home Office Cody WY
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Tax Deduction Consulting: Home Office
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.
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.
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 ac...