For people who work from home, doing taxes at the end of the year can be very frustrating. Aside from the regular 1040 income tax forms, independent contractors also have to complete a Schedule C for Profit or Loss From Business and Form 8829 for Expenses for Business Use of Your Home. Learning how to complete your taxes and what to deduct can save a lot of time and money.
Tax Deductions for Your Home
The IRS allow you to take a deductions for the business use of your home. Filers are allowed to take a percentage of their mortgage including interest, real estate taxes, insurance, repairs and maintenance. Homeowners are also allowed to deduct a portion of their utilities for the home such as electricity, gas, water and phone since they are required for the use of the business.
Tax Deductions for Your Office
Every item you purchase for your office including furniture, computers, printers and Internet access can be taken as a tax deduction. Always keep records and receipts for every expense purchased for your business as well as the gas used and other expenses for your car such as registration and repairs.
Tax Deductions for Your Business
Other expenses for your business such as advertising, legal, website, postage, travel, entertainment, meals and licenses can be taken as full deductions on your tax return. Many of these items are a surprise because most people don’t think of them as expenses, but these normal daily expenditures are also tax write-offs.
One of the questions we get asked most about is taxes such as how to complete a tax return when you work from home, how to pay the taxes, what can be deducted and when to file a return. We receive hundreds of tax related questions every year from people who work from home. Filing taxes can be very hard and stressful without someone to send you in the right direction. We usually recommend going to a tax professional the first time to get help and to allow them to show you what forms are required and exactly what you need to do, says Angela Kane (Senior Customer Service Representative for HEA-Employment.com)
The benefits of working from home such as saving money on everyday expenses such as gas, food and clothes are well known. However most forget about the benefits of tax deductions and saving even more money. Working from home can be stressful especially when taxes are due, but like everything else, it will get better over time. Almost everything you use while operating your business can be taken as a tax deduction so make sure you include as much as possible to maximize your benefits and reduce your liability.