Self Employed Benefits

Self Employed Home Deductions

If you are self employed and working from home you may be able to take your home office expenses and deduct them off your taxes. That includes a portion of rent, utilities, Internet and phone. There are some pretty strict guidelines though and many people avoid taking the deduction because it can cause serious issues with the IRS.

There are a lot of deductions available like the commuting deduction self-employed individuals can take if they commute or their business requires a lot of driving. With any type of tax deduction the part that needs to be considered most are the regulations and rules. It is important to make sure that you met all the requirements before taking the deduction. In the case of the home deductions, there are three basics that need to be covered in order for the deduction to be valid.

The first point that needs to be covered is dedicated space. Basically, the space you use for your home office needs to be used just for that. It cannot be a corner of your living room or your kitchen table, since that space is used for family space as well. It needs to be a separate room. The second point is that you actually have to use the office. There are a lot of people who are self-employed who actually rent office space. This is good if you have employees or if you want to maintain the, at work and then at home atmosphere. Normally if you rent space, you cannot deduct the space from your home unless you can prove that you regularly use the space at home for business purposes as well as the office space you have rented.

The third point is the principle base for business, this means that your home office must be used for administrative tasks, to bring clients too or be a separate structure. If it meets one of the three, it qualifies. For example, if you maintain the accounting records, employee files, and that type of thing at the home office it qualifies as your center for administrative duties. That means you may be able to deduct it from your taxes provided you met the other two criteria as well. If you are not sure if you are qualified or not check with a tax professional, these individuals are trained in all the rules and regulations and should be able to tell you if you quality or not.

Other places that you might be able to find deductions if you are in a home based business, are areas like the real estate taxes on your home, repairs for the area of your home that is your office, business related utilities and expenses, interest on business loans, insurance and educational expense. If you run your own business from your home, you may want to consider tax deductions as a way to help your business grow by saving you money.

This is not intended to be used as tax advice and for specific information contact the IRS.

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