Tax Advantages Of The Home Based Business

Owning and operating a​ home based business has many advantages and benefits over working at​ a​ regular 9-5 job. There is​ always the​ simple pleasure of​ just being at​ home in​ addition to​ the​ above average income the​ self employed usually bring in. One consideration that you​ may not have fully explored is​ the​ qualifying deductions you​ can make on​ your tax return.

Home Office Deduction

Your office at​ home and related expenses are allowed deductions according to​ IRS guidelines. to​ qualify,​ your home must be the​ primary place where your business is​ conducted. Additionally,​ the​ office space must be used exclusively for your business. it​ is​ best to​ have a​ room that is​ obviously equipped for business use only. Should a​ question arise,​ there must not be any doubt that the​ room is​ used for other purposes. Needless to​ say,​ keep the​ day bed in​ another room.Details of​ what qualifies as​ a​ home office and what can be deducted is​ explained more fully in​ various IRS publications found on​ their website at​

Home Office Building Expenses

You can deduct home office improvements and repairs. So,​ if​ you​ were to​ paint your home office,​ it​ is​ considered an​ expense associated with conducting business from your home and it​ is​ deductible.You can also deduct mortgage interest as​ a​ percentage of​ the​ full mortgage paid on​ your home. Lets say if​ your home office takes up 100 square feet of​ your 1,​000 square foot home,​ you​ could deduct up to​ 10% of​ the​ interest on​ your home mortgage as​ a​ business expense. This also applies to​ those who rent. Property taxes paid for your home also qualify at​ the​ same percentage rate as​ the​ mortgage. Home owners can also depreciate a​ percentage of​ the​ home over 39 years. Home expenses that are not related to​ your business cannot be deducted.


Using the​ same percentages,​ you​ can also write off utilities such as​ electrical,​ gas,​ 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.


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.


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.


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.


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.


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.
Tax Advantages Of The Home Based Business Tax Advantages Of The Home Based Business Reviewed by Henda Yesti on June 28, 2018 Rating: 5

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