How some of your personal expenses can become valuable Business DeductionsOnce again, let me make myself clear. I do believe we should pay the taxes the Government requires. That being said, I do NOT believe we should have to over pay. The law, in fact, does NOT require that we OVER PAY.So let’s look at some ways to keep some of our tax money.Your business is a business no matter how big or small it is. It is your business no matter where you locate it, be it at home or rent space somewhere. And it is a business whether or not you currently make a profit.With a home business, your home is your office building and so the costs to maintain that business portion become Tax Deductible.Let me give you a quick list of deductions you should look at:Mortgage interest or rentUtilitiesPhones and other office equipment (computers, all in ones)Paper, toner, postageFurniture, desks, sofa, coffee tablePainting, wall paper, other repairs/remodelingPhone bills, cell phone, PDA’sNewspaper, magazines, books and on line mediaTravel, hotels, meals, rental car while travelingHoliday cards, postage and giftsThese expenses may be deductible only if they are Ordinary, Necessary, reasonable in amount and linked to the business in question.Now, most of what I listed are things you use in your home anyway. What makes them a tax deduction is that you also use them for your business.Remember I said to keep good records? This is another reason for that. You simply supply support for the deductible business part of your home related expenses.For details in exact depreciation of currently owned and specifically purchased items to be converted to business use, see your tax professional who specializes in Home Business tax laws.Now we can not write off 100% of all the things listed above. After all, we also live in the house in question. But here is how you can determine how much of each you can write off.There are 3 terms to understand:Indirect ExpensesDirect ExpensesAndBusiness AssetsAn example of Indirect Expenses would be rent, utilities, general maintenance (replacement of the roof or repair of the exterior of the house).Direct Expenses are just that. Expenses directly related to running your business. Office supplies, phone service, maybe cell phones and these are generally 100% deductible.Now the deduction for the phone service is a bit different. Keep in mind the following. The base phone charges are not deductible. This only applies to the first land line in your home. But if you have another land line, let’s say, connected to your fax machine. That line is 100% deductible. Any add-on to the serves can be 100% deductible as well. (If subscribing to them is ordinary and necessary for your business).Call waiting, long distance, 3 ways may all be deductible. Lets say you have a bundled package that includes cable, phone and internet. Do you need long distance for business? Yes, and do you use the internet for business? Yes and even though you may call your sister or Aunt Martha, this does not affect the amount of your phone bill, so the cost is still 100% deductible.Business Assets are just what you would expect. Equipment and furniture and things bought specifically for the business. These are 100% tax deductible.This is a lot to absorb. Read over it again carefully.Next week I will give you some tax breaks you may not have thought of.Like, hire your kids or your spouse. The money you pay them is a tax write off.
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