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Read About Taxes Below
Home-Based Business Owners Save Thousands on Their Taxes
Do You Qualify For Home-Based Tax Deductions?
New changes in the tax laws have made it easier than ever to claim Home Office Deductions and keep more of what you earn.
If your home is a place of business, many of your personal expenses can be deducted as business expenses resulting in lower taxes.
You may be thinking, "I have an Accountant/CPA/Tax Preparer/Tax Software who knows all about tax deductions so I don't have to know anything about them."
There are several reasons why that thinking could be costing you thousands of tax dollars. Some of those reasons are:
- Most Accountants/CPA's/Tax Preparers do not "specialize" in Home-Based Businesses and do not keep up with the ever-changing laws pertaining to them.
- You are ultimately responsible for knowing what you can and cannot deduct as business expenses. Why? YOU are accountable to the IRS for your deductions, not the tax preparer.
- If you pay someone to do your taxes you still need to know what you can deduct so that you can gather all relevant paperwork.
- The most compelling reason: Getting the greatest benefit from your deductions.
To qualify for these deductions you must meet 2 conditions, which most, if not all, Internet Marketers meet.
Condition 1: Do you work as an Internet marketer out of your home (on your "home computer)?
To qualify for deducting expenses related to using a workspace for business in your home, your home must be
- Your "principal place of business " or you must use the space only to earn your business income.
- Use it on a regular and ongoing basis to meet your clients, customers, or patients.
AND
Condition 2: Are you in business to make a profit?
Whether you made a profit or not is immaterial. Even if you lost money but intended to make a profit these deductions are still available to you.
If you answered yes to both of these questions then you do own a Home-Based Business and as such you are qualified to deduct Business Assets, Direct and Indirect Expenses.
Business Assets include business equipment such as computer, fax machines, business furniture such as desk (your dining room table for instance), desk chair and filing cabinets. These are 100% deductible if they are used "exclusively" for business purposes.
If these assets are not used "exclusively' for business the amount you can deduct is proportionally related to how much these things are used in your business. It is possible to deduct a portion of your living room, sofa, DVD player etc if you meet certain conditions.
Direct Expenses are those directly related to conducting your business. This would include office supplies, telephone service,, cellular phones, ISP service, hosting, advertising etc. Direct expenses are generally 100% deductible.
Indirect Expenses include such things as rent on your home, utilities including heating and air conditioning and general repairs such as replacing a roof or repainting the exterior of your home.
These are authorized legal deductions passed into law specifically for Home-Based Businesses by congress.
If you use your home for business purposes, many of your personal expenses can legally be converted into deductible business expenses including utilities such as heat and electricity, cleaning materials, house insurance and property taxes.
Learn all you can about what you can deduct and you will consistently save thousands on your income tax each year.
"I'm proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money." - Arthur Godfrey
© 2004 By Karin Workman, A 30-year veteran Home-Based Business Owner who specializes in Tax Preparation for Home-Based Businesses. Karin also wrote the Hot New Ecourse: "Reap the Rewards!" Designed to help you save tax dollars and put more money into YOUR pocket. The course is Free so do yourself a favor and subscribe today. http://reaptherewards.businessoppsunlimited.com
Related Links:
Employment Taxes What Are They
I Cant Pay My Taxes What Do I Do
Understanding the Taxes Imposed on Your Telecom Bills
Alabama
Get The Facts on Debt!
Repossessions, wage garnishment, property seizures and foreclosures are words which strike fear into the heart of every consumer.
The general assumption is that overdue debts will result in these drastic measures. Sure, if you've put up property as collateral on a loan which you are unable to pay, it will typically be seized or repossesed. But the same does not necessarily hold true for unsecured debts. In reality very few creditors will ever push for garnishment on small unsecured debts. Garnishment and seizure are a creditor's most effective weapons to collect an outstanding debt, but they are also very expensive and time-consuming to the creditor. While it is within the creditor's legal rights to pursue collections through any of these means, the cost of recovering a debt often exceeds the amount of the debt itself, and so it's not always cost efficient to force a collection.
Sadly enough, in the United States alone thousands of bankruptcies are filed every week in response to collection efforts on unsecured debts under $5000. Consumers are so intimidated by creditors that they fold under the perceived pressure, resorting to bankruptcy as a means of escaping an unsecured debt. If these same consumers had simply ignored the threatening letters and intimidating phone calls, they would have discovered that most creditors are all bark and no bite. Bankruptcy is arguably the worst type of negative listing you can have, and it is almost certain to wreak havoc on your credit report for the next ten years. You should therefore consider a bankruptcy lawyer only as a last resort, and possibly never as an option to escape a relatively small, unsecured debt.
