Home-Based Business, Taxes and What You Can Claim

The write-offs that you can claim when running a home-based business are similar to those outside the home with a few exceptions. Running a company from where you live allows you to deduct a percentage of the personal expenses you’d typically not be able to claim. This article gives examples of write-offs that you should consider.

  • Repairs. Leaky roof? Broken window? If you need to make repairs to the area where you work then see if they qualify as business expenses. These are costs that would not have been deductible on your personal tax return but having a home office can make the difference.
    • Maintenance. Lawn care and snow removal are necessary to the attractiveness and safety of your business when meeting clients in your home. Save receipts that show who you paid, the amount, and payment date to claim this cost when you file.
    • Office Supplies are a necessity to running your business. Some that are specific to your home office are allowable deductions. Keep up with the cost of computer supplies, ink, envelopes and even cleaning items for your dedicated office space.
    • Utilities. Guess what? The lights and gas you use to see and keep warm while you work are part of the cost of doing business, too. But in order to claim these expenses you will need to do some math first. Determine the square footage of your office space in relation to the total square footage of your home. Use that percentage to figure out the right amount to deduct.
  • For example, if your home or apartment is 1,000 square feet and the dedicated space that you use as home office is 100 square feet, then your home office deduction percentage is 10% (1,000 / 100). Note: If you run a day care center in your home, the use of your home may be different. Seek the advice of an accountant for help figuring out what applies.

    • Property Taxes and Mortgage Interest. Other home based business costs include property taxes and mortgage interest. If you are a home owner be sure to include these costs when filing your business return. To claim the expense you will need to allocate them between what you report on your business and personal tax return.
    • Mortgage Insurance. Property insurance can be a significant deduction for home based business owners. This also applies for renters who pay rental insurance.
  • As you can see there are many benefits of running a business from home. To learn more about the requirements of claiming home based business deductions click here to request your checklist.
  • Copyright (c) 2019 Benita Tyler

    WomanCFO is committed to helping small business owners achieve their profit goals, minimize tax liabilities, and build wealth.

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