As a continuation of yesterday’s post, are some additional taxes deductions you should deal with carefully below. If you home based, you can only just write-off the percentage of your bills related to the area dedicated solely to your business. For accuracy, which is something the IRS appreciates, hire a contractor to measure your office at home space professionally and offer the square footage that your office at home occupies. Once you have the measurements, figure out what percentage of your home is dedicated to your business.
You may then write-off that percentage of your mortgage/rent, bills, etc. Keep in mind, however, that this area of your house can be used exclusively for your business. If it is, in any real way, used for personal matters (i.e., your family computer is used for both business and personal), then you cannot quickly percentages of your household bills. If your home computer is used for both personal and business matters, then the expense of the computer is not deductible. Instead, you will need to keep a log of the time you utilize it for business purposes, much as with your office at home.
Then, determine a share of your time in which you utilize the computer for business, which is how much of the computer is deductible. Another option is always to invest in a laptop that you use for business purposes only. This permits the entire expense of the laptop to be deductible.
If you have a home office, phone expenses do not be categorized as the category of expenses you can write off a percentage of. As as your mobile phone long, whether a mobile or landline is not used a great deal for personal calls, then you can write off the whole bill. However, if the phone is utilized by you for both, then you will need to make sure and get an itemized bill from the phone company and indicate which calls, both incoming and outgoing, were business related.
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It’s smart to also show that client each call was related to. The best and easiest way to avoid the extra time and work is to simply buy a separate cell phone or get a separate phone line in your home for business phone calls only. If you choose the separate cell phone, you can write-off the telephone itself also. In most cases, when you can wear it outside of your job, like a new suit you wore for work but also to church or a funeral, then it is not deductible.
However, if you perform as a clown for children’s birthday celebrations, your clown costume is deductible then. Another example would be the costume a Las Vegas showgirl may wear. These are just a handful of the vast expenses that you might be able to write-off each year. It’s a good idea to consult with a professional accountant if you aren’t familiar with all the regulations. It’s better to spend just a little extra money getting some help the first few times than to make a mistake and get audited.