| Work From Home Tax Benefits by Thom Gruber |
Working From Home Offers Special Tax Benefits
Developing a business working from home can reduce the taxes you are CURRENTLY
paying by thousands of dollars per year. This means that the IRS is essentially
paying the cost for you to start your business! The tax code is set up to allow
many deductions for business owners that are not available to employees.
Properly documented expenses can be used to offset current income from your job –
even if your new business doesn’t make a profit right away. These deductions can
add up to thousands of dollars per year.
Here are some examples:
Meals and Entertainment – If you go out to lunch or dinner with a friend, make
sure you talk about your business. This makes your meal (and theirs if you pay
for it) tax deductible. This can really add up if you go to lunch with your co-
workers every day. (Meals are 50% deductible.) If you entertain clients at your
home and serve them dinner and drinks, you can deduct 50% of the cost too. (Every
person that comes to your home is a potential client or associate!)
Travel - If you combine a family vacation with business and conduct some
business (even an hour) on at least 51% of the days you are gone (travel days can
be counted as business days), you can deduct the FULL cost of transportation and
the cost of lodging on the night you conducted business. Plus you can deduct 50%
of your meals while traveling.
Car – You can deduct expenses for business use of your car. You need to keep a
record of expenses and a log of miles driven for business vs. personal use.
Home Office – You can deduct a percentage of your property taxes, mortgage
interest, insurance, utilities, repairs, cleaning costs, etc. If you use a
designated area in your home exclusively for your business.
Medical Deductions - In addition to your medical insurance premiums, you can set
up a medical reimbursement plan and write off the dental, optical (including
glasses and contacts), braces , chiropractic, massages and everything else not
covered under a normal insurance plan.
Hire Your Children - Hire your children and pay them. (Make sure they have a
real job to do and keep track of their time.) They are in a lower tax bracket and
if they are under 18 they are exempt for Social Security taxes. Put the money in
a separate account for them and use it to pay for college. This can save you a
lot, because
you’ll pay taxes at their lower rate on money you would have paid taxes on at
your HIGHER rate.
Pension Plan - As a business owner, you can set up a tax deductible pension plan
that is probably better than you have available at your job.
Using some of these examples I wrote off over (showed a loss) $17,000.00+ in 2004
as a business expense. This was in my last business not automaticbuilder.com/
NUTRONIX. But, it works the same for ALL BUSINESS! Many small business owners
(especially Home Based Business owners) do not know many of these deductions even
exist!
Tax laws CHANGE EVERY YEAR! So, ALWAYS consult a TAX PROFESSIONAL, PA, or CPA to
get the latest up to date information!
Developing a business working from home can reduce the taxes you are CURRENTLY
paying by thousands of dollars per year. This means that the IRS is essentially
paying the cost for you to start your business! The tax code is set up to allow
many deductions for business owners that are not available to employees.
Properly documented expenses can be used to offset current income from your job –
even if your new business doesn’t make a profit right away. These deductions can
add up to thousands of dollars per year.
Here are some examples:
Meals and Entertainment – If you go out to lunch or dinner with a friend, make
sure you talk about your business. This makes your meal (and theirs if you pay
for it) tax deductible. This can really add up if you go to lunch with your co-
workers every day. (Meals are 50% deductible.) If you entertain clients at your
home and serve them dinner and drinks, you can deduct 50% of the cost too. (Every
person that comes to your home is a potential client or associate!)
Travel - If you combine a family vacation with business and conduct some
business (even an hour) on at least 51% of the days you are gone (travel days can
be counted as business days), you can deduct the FULL cost of transportation and
the cost of lodging on the night you conducted business. Plus you can deduct 50%
of your meals while traveling.
Car – You can deduct expenses for business use of your car. You need to keep a
record of expenses and a log of miles driven for business vs. personal use.
Home Office – You can deduct a percentage of your property taxes, mortgage
interest, insurance, utilities, repairs, cleaning costs, etc. If you use a
designated area in your home exclusively for your business.
Medical Deductions - In addition to your medical insurance premiums, you can set
up a medical reimbursement plan and write off the dental, optical (including
glasses and contacts), braces , chiropractic, massages and everything else not
covered under a normal insurance plan.
Hire Your Children - Hire your children and pay them. (Make sure they have a
real job to do and keep track of their time.) They are in a lower tax bracket and
if they are under 18 they are exempt for Social Security taxes. Put the money in
a separate account for them and use it to pay for college. This can save you a
lot, because
you’ll pay taxes at their lower rate on money you would have paid taxes on at
your HIGHER rate.
Pension Plan - As a business owner, you can set up a tax deductible pension plan
that is probably better than you have available at your job.
Using some of these examples I wrote off over (showed a loss) $17,000.00+ in 2004
as a business expense. This was in my last business not automaticbuilder.com/
NUTRONIX. But, it works the same for ALL BUSINESS! Many small business owners
(especially Home Based Business owners) do not know many of these deductions even
exist!
Tax laws CHANGE EVERY YEAR! So, ALWAYS consult a TAX PROFESSIONAL, PA, or CPA to
get the latest up to date information!