Question

I operate an in-home business. What business documents do I need to claim business expenses?

Answer

To claim business expenses you will need to provide related business documents including receipts for all of the business expenses you want to deduct. Your documents should show:

  • Amount
  • Date
  • Place
  • Essential character of the expense

The documents can include:

  • Receipts
  • Cancelled checks
  • An account book
  • Customer account book
  • Expense report
  • Accounting log
  • A diary
  • Calendar
  • Other record that duplicates information shown on a receipt kept at or near the time of the expense

After you file, you should keep these business documents with a copy of your tax return.

For the business use of your home, you’ll allocate the home office expenses. This is based on the percentage of the square footage of your home used regularly and exclusively for business.

Expenses you might incur when running a business from your home include:

  • Real estate taxes
  • Qualified mortgage insurance premiums
  • Deductible mortgage interest
  • Casualty losses
  • Depreciation
  • Insurance
  • Rent
  • Repairs
  • Security system
  • Utilities and services

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