A big advantage of working from home is the tax benefits of operating a home based business.
You can deduct home expenses if you actually work in your home. Working from home allows you to deduct portions of bills that you are already paying to live there. It is easiest to do this if you have a room set aside for your business. Figure out how big that room is in proportion to the house, and you can deduct expenses using that percentage.
You can deduct costs for your internet service provider in proportion to the amount you use it on business, too. If it’s used completely for business you can deduct it all, but be certain before you do this that you are not using it for other reasons.
The tax benefits of operating a home based business enable you to deduct things you would otherwise be paying in full. If you are considering a business from home, it’s a good way to lower your costs. This is just one more advantage of working from home.
No matter how you prepare your taxes, using pencil and paper, using a software package or hiring a professional preparer, it is to your advantage to take every available deduction on your income taxes and every valid credit, so that you are minimizing taxes paid.
Take the Tax Credit
As a basic rule, tax credits mean more to you when compared to tax deductions, since they actually decrease your tax payment for each dollar.
Owning a business comes with many advantages compared to those that don’t. According to the expense election of section 179 business owners who invest in products like cars, furniture, and even computers can benefit to up to $thousands. There are however some limitations to this qualification.
Bottom Line
Owning a home based business is a great way to reduce your tax burden. If you still have a J.O.B., use your home based business as leverage to reduce the amount of taxes withheld by your employer and use those dollars to finance your home business. It only makes sense, in my opinion, that everyone should have some kind of home based business and pay less taxes.
