BellaOnline Forums Money Taxes Working From Home Deductions

Let's brainstorm about what we can deduct from our taxes by working from home!

I deduct my internet connection fee of course. Also because I have our "den" as my office, I take the square footage of the den as a percentage of the whole house (let's say 20%). I then can deduct 20% of our electrical bills, heating bills, etc. to pay for keeping my office warm and supplied.

If you have to travel, in your job you do from home, keep mileage records and you can deduct your total mileage driven for your job. That would also allow you to deduct certain parts of your auto's upkeep, cost and depreciation, maintenance, etc. Travel deductions can make up pretty hefty deductions, if you have to do ANY travel connected with your job.

Trish

It is also important to note that if you are taking a home office deduction on space in your home used for your work from home business it must be an area that you are using exclusively for business. Also if you own your home don't overlook the fact that you can generally take a depreciation deduction on the portion of your home you are using exclusively as your home office.

Travel expenses related to your home business are indeed deductible. You can either take the standard mileage deduction or the actual expenses which includes allowable depreciation on your vehicle. Limited to the business portion the deduction is calculated based on what percentage your business miles are of total miles you have put on your vehicle for the year so you should try to remember to jot the beginning mileage and ending mileage from your odometer somewhere in your business travel expense documentation every year. Also you cannot generally switch back and forth between standard and actual methods of calculation.

Purchasing business equipment is of course a great deduction and if it is a higher cost item it should be depreciated over the life of the equipment but don't overlook the fact that under certain circumstances you can take a Section 179 Deduction to write off the full cost in the year of purchase. Keep in mind if the equipment is shared between personal and business use you can only take a deduction for the percentage of business use.

Don't forget if you are doing your own taxes to check to see if you are eligible to use Free File at www.irs.gov

Kate

The car deductions are great - keep a small notebook in your car and write down each time you go on a trip. That way you don't forget

When you are working at home it's also very important to operate in a businesslike manner. Sometimes when a return is filed if it is reviewed, the IRS might want documentation to prove that your business is in fact not just a hobby that you are attempting to classify as a business so you can take your deductions even if they create a loss situation. Little things like having a business card for marketing and keeping an organized set of business books in hard copy or in Quickbooks or another similar software package are helpful in making a case that your business is not just a hobby. For more on this subject you can read "Is Your Creative Activity A Business Or Is It A Hobby?" atBellaOnline ALERT: Raw URLs are not allowed in these forums for security reasons. Please use UBB code. If you don't know how to do UBB code just post here for help - we will help out!

Very good tips!! Thanks!!

I definitely use QuickBooks, it makes my financial organizing so much easier