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Are You Eligible For Tax Deductions With A Home Based Business
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Just as a regular brick and mortar business gets tax deductions, home-based businesses are also eligible for certain tax deductions that can help save some money. It is important to find out, as to which expenses can be deducted, in order to get the most out of it. Here are some tax deductions that you can claim, when running your home-based business.
Traveling Expenses: If you travel by air for any business related to work, then you should definitely save your tickets or receipts, by claiming those expenses as tax deductions. If you are using your car for your business needs, then you can also deduct those expenses, including your fuel bills, repair bills, insurance and loan repayments. You will also need to maintain a mileage log of your car. These expenses will, however be permissible only when you use your car for business purposes only and not for your personal purposes. Even if you travel out of town for your business, then you can still deduct your hotel room and meal expenses. However, if you take your family along, then you will only be able to claim for yourself and not for your family. If you take any business associate to lunch or dinner, then these too can be claimed, provided you have saved your restaurant bills.
Telephone Expenses: In order to avoid confusion, while filing your taxes, it is better to install a separate phone line in your home or purchase a separate mobile phone that caters only to your business. You can then claim these phone bills as tax deductions.
Home Mortgage Interest: You can also deduct the corresponding amount of your home mortgage interest that you are currently using as your home-based office. The space utilized by your office will be compared with the total size of your home and the corresponding percentage will be allowed as a deduction. However, your office space should be dedicated only for office use, otherwise you will only be allowed a partial deduction.
Business Supplies And Equipment: If you are using a computer or a copier for your business, then you can also claim such expenses as deductions. Accounting software packages, anti-virus programs or any other computer programs along with recurring expenses, such as computer stationary, postage or other expenses can also be included in tax deductions. If you are using an Internet service, then you can also claim these expenses as tax deductions. Make a point to save all the invoices related to your supplies and expenses, in order to legitimize your claims.
Insurance Premiums: You can also deduct your health insurance premiums, if you are running your home business on a sole proprietorship basis. However, you will not be allowed to do the same for your family members, unless they are also employed in your business. You can also deduct half the amount of your personal social security payments.
It would be better, if you just save all the bills and receipts of all your expenses incurred in your home based business and submit them to your tax consultant, who can then sort them and claim them under the correct deduction heading. You should not have any problems with the tax authorities, if your tax deductions are genuine and you have the necessary bills to back your claims.
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