Working from home is never easy. But if it was easy, then everyone would be choosing to work from the comforts of home. If you want to be prepared by the October 17 deadline, check out some of these tax tips for business owners and some of the most overlooked tax deductions.
This is a category you’ll have to think outside of the box for. How much does it cost to run your business? You can deduct office equipment such as desktop computers, laptops, printers, and replacement ink and toner. Copy machine, fax machine, and phone systems also fit under this category.
What about the paper you use? Consider your company stationary with the letterhead and business cards? These items can be deducted from your taxable income. All you need to do is make sure they’re used for your business only.
When it comes to your online business, cost and fees will vary each year. Do you pay for a domain name and website hosting? Do you use an online accountant, online banking, or online payroll software? Don’t skip any of these areas when filing your taxes.
As previously mentioned, you can write off your equipment. Make sure that the space that you use in your home counts as a home office tax deduction. It has to be a space that’s dedicated to working only. The IRS will allow you to deduct your rent or mortgage since it relates to the space used for your office.
Since your office takes place within your home, you can also write off your home insurance and utility bills. This will depend on the size of your home office. Even if you don’t do the home office deduction, you can still deduct your office supplies as long as you use them for work.
Speaking of utility bills, you should take advantage of the solar tax credit. You can deduct up to 30% of your energy costs if you installed a solar energy system. Since it applies to residential and commercial businesses, there is no cap on the value.
Otherwise, your home office can be deducted up to $1,500 per 300 square feet of office space at $5.00 per square.
Think about how many pens, highlighters, and permanent marketers you go through. Consider how many paperclips, Post-It notes, and staplers you used. Think about the costs of your office supplies and everyday items that you use for work. When you run a home business, you’ll realize how quickly these items add up.
Don’t exclude your office furniture. Your chair, desk, printer stand, and trash can all be deducted on your tax return. Remember to hold onto the receipts when purchasing any of these items for your home office.
Every industry has ongoing education and training programs to keep them educated and up to date about current strategies and the latest ideas. Keeping up to date with these trends isn’t easy when you work from home. Training and continuing education often come at a steep price. You’ll have to pay to attend a conference or to take an online class.
There are times when you’ll have to pay to travel to meet a potential client. You might even have to book a hotel room depending on the length and location of the conference or business meeting. All of your business trip, education, and training expenses are tax deductible. Even the money you spend on client dinners, parking, shuttles, and taxi service are deductible.
If you opt for car rental, that expenses are deductible as long as that vehicle is strictly used for business.
Have you purchased a new desktop computer or laptop in the past year? Did you have to invest in a new dual monitor, tablet, or another piece of technology to help operate your business? This is all tax deductible. Make sure that your tablet and laptop is for business purposes only and not for your children’s entertainment purposes.
Did you purchase any computer software? If you don’t purchase a new computer, but you had to update your hardware or software, this counts as a tax expense. These are important deductions to keep in mind because hardware and software can quickly add up.
These include a list of deductibles that don’t fit underneath the above categories. There are so many tax deductions related to working from home. The list is so long that it can’t fit into an entire article. You don’t have to worry about these tax deductions if you use tax and accounting software. The tax software you use will ask you questions about your business and help make the right decisions based on your answers. Your accounting software can help you keep track of your income and expenses, so you’re ready for tax time.
by: Dennis Hung
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