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etcetera.
Phones and Communications
The IRS considers the first phone line in your home to be personal. Additional lines for business use including a cell phone are tax deductible. Internet service fees are deductible as a percentage depending on its business use.
Security
A percentage of the secured home area and its security costs are deductible as a business cost.
Moving Expenses
Form 8829 titled Expenses for the Business Use of Your Home is where you would claim moving expenses related to your business. Again, if 25% of your belongings were business items, that percentage can be written off as a business expense. Unfortunately, a C corporation cannot claim this deduction.
Software
Any software that you purchase for business use can be deducted. You will probably be required to write off over a period of time programs that are over $500 in value though. Check with IRS guidelines for further information.
Insurance
The premium you pay on your home owner's insurance is partially deductible. Any insurance that covers your business specifically can be deducted as a cost of doing business. An incurred loss not covered by insurance can be deducted fully or partially depending on its' use.
Tax Preparation Expenses
You might be able to deduct the cost of having your taxes prepared even though it may not be specifically about your home based business. Any software that you purchase to help you prepare your taxes for your business may also be deductible.
Retirement Account
Contributions to a self employed retirement account may also help reduce your tax liability. Inquire with a qualified specialist like a CPA to determine current laws regarding this special benefit.
Educational Expenses
Any monies spent on learning skills that are specific to your home business are usually tax deductible. If you purchase a course in gift basket making for example as a precept to starting your gift basket home business, that would be tax deductible.
Transportation
You can write off transportation expenses related to your business. Traveling to and from a clients place of business, for example, would qualify. The IRS allowed 37.5 cents per mile for the 2004 tax year. You must keep detailed records though. A journal kept in your car with odometer readings should suffice.
Meals and Entertainment
If you entertain while conducting business even if it just over a meal it is deductible. While you can only deduct 50% of the cost of meals and entertainment, it is well worth keeping records. Additionally, you can deduct your meals if you are conducting business out of town. Please remember to stay within IRS guidelines to avoid awkward questions later.
Summary
Most home businesses do not take all the deductions that they are legally entitled to mainly because the idea of an audit is so fear invoking. Just stay within the IRS guidelines, keep receipts and accurate records. If you have any questions or doubts, call and ask the IRS. You can also consult with a tax preparer to help you discover, implement, and plan on what deductions you can legally take.
Remember, tax deductions are a way to foster the growth of your business. Take advantage of your legal right to legally minimize your tax liability, your home based business will be glad you did.
Article Source: http://www.article-matrix.com
Robert Williams is the Editor of Work At Home Business Website. For Robert's Home Business Blog Click Here.
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