Tax & Business Services |
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Is home where your small business is? Do you use your home office regularly and exclusively as your principal place of business? If so, some of your home-office expenses could turn into tax deductions. Business-use includes everything from simple administration tasks to management. Even plumbers, even though they perform a majority of the business outside their home offices, can take the tax deduction if they use their home offices exclusively and regularly for ordering supplies and making appointments. Home-office tax deductions If you work out of your home, you can deduct a portion of home expenses, such as rent, mortgage interest, insurance, security systems, utilities, casualty losses and depreciation, as well as maintenance and repairs that are normally personal expenses. Even if you don't have an area in your home set aside for your small business, you can still deduct business-related expenses you incur at home. For example, you can deduct the cost of a business phone line and long-distance business calls. The catch to a home-office tax deduction You cannot use the space and/or services at all for any personal reason and still have it qualify as a business tax deduction. If your child uses your computer for homework or your business line to talk to friends, you can no longer claim these business expenses as tax deductions. However, the home office does not need to be a separate room. It can be part of a dining room, basement, or even a bedroom, as long as that part of the house is used for no other purpose. Also, if you sell your home, your office may be considered business property. At the time of the sale of your home, gain on the sale up to the depreciation claimed is generally taxable. |