By Guest Contributor Barry G. Garner
There are a number of substantial tax deductions home business owners can take advantage of.
I don’t know about you, but I hate paying more than my fair portion of taxes. In these difficult economic times, it is critical for individuals to keep every dime in our pocket that we can. Running a home based business is one of the greatest ways to keep your hard earned money in your own pocket. Although there are many other home business write offs, the six below are the chief tax breaks.
6 Tax Deductions Home Business Owners Can Use
1) Mileage Expenses
One of the biggest expenses home business owners have available is mileage expense. Business owners can honestly deduct $3000 to $5000 or more per year for using their car for business use. If the main object of a trip is to conduct business, the mileage for the total trip can be deducted. Creating the right home based business can be key when mixing typical personal use of a car and business.
2) Even family trips may be deductible when they are planned correctly.
Basically, if half the days on a trip are business days they qualify. A business day includes travel and any prearranged appointments, even if they are short. Personally, all my vacations and trips are scheduled around business.
3) Hire Kids For Tax Free Income
This one is really great! Children over 6 years old can help you in your home based business and this is one of the tax deductions home business owners often forget. Kids are wonderful at helping carry out tasks for the home business, and their wages are an expense to the business. The wisdom of this is that their wages are tax free and there are no payroll withholdings if the child is under 18.
4) Deduct Health Expenditures
Having a home based business gives you an IRS approved deduction for writing off all your non reimbursed health costs. These can consist of insurance premiums, deductibles, co-pays, and other non-covered expenses. This deduction can be huge for those who have significant health expenses.
5) Home Office Write Off
The Home office write off is an additional huge tax deduction. Home business owners can write off a home office if it is the principal place of business. This office in the home deduction can change hundreds of dollars per month from non-deductible personal expenses to deductible expenses for business.
These expenses can incorporate a part of your rent or mortgage as well as utility costs such as electricity, air conditioning and heat, sewer, water, and Home Owners Association dues. Even a percentage of lawn maintenance and repairs can be deducted from working a business from your home.
6) Deduct Meals and Entertainment
Home based business owners can deduct for meals and entertainment that are necessary to conduct their business. There are obviously a number of requirements, but as a general rule, 50% of meals and entertainment costs can be deducted. These must be centered around a business setting and be directly related to performing the task of operating the business. Entertainment is also deductible, and one of my favorites in this category is the 100% deduction for entertaining in the home, related to my business.
So what does this mean for you? It means that if you don’t have a home business, you ought to get one. The congress has put these deductions in place because they believe that healthy home businesses are advantageous for our economy. Tax deductions home business owners wisely employ, fund the expense of running the business. And everyone benefits.
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Another great guide to tax deductions and tips is My Tax Tutor For Small Business
We’d love to hear your tax tips and suggestions. Please tell us in the comments.
About Celene Harrelson
