Six Tax Advantages of Working From Home
Andy Fleming writing on tax deductions…
Thinking about ditching life at the office for a chance to work from home? Studies show nearly a quarter of all Americans do at least some work from a home office. It can be an attractive prospect, you’re able to set your own hours and work at a pace that best suits you. Plus, you don’t have to worry about your boss breathing down your neck…or the smell of the feta cheese and pasta salad your office mate brought in for lunch.
Working from home doesn’t just offer you more freedom, it also gives you a chance to save some money when tax season rolls around. You can deduct certain items from your taxes if you work primarily from a home office, and even more deductions become available to you if you’re self-employed.
This is something you should definitely take into account if you’re looking into any sort of self-directed career change in the near future. Thinking about moving to a rural location and starting a small farm? As long as you run the administration of your farm from home, you’re eligible for these deductions.
The same goes for if you decide to start a small business. Perhaps you’ve decided to turn a profit from your flower garden and start selling goods at a farmers market? As long as you manage your sales from home, you’ve got a plethora of new deductions you can take advantage of.
Take a look at the deductions available below and make sure you keep detailed notes and records. You can’t effectively itemize your deductions otherwise; and you should never miss out on the opportunity to keep the government from getting their hands on your hard earned income.
There’s good news for those who are just getting into the small business world and need a little help along the way. You can deduct any professional education you need to run or grow your business. This means any business-related courses you take can be deducted at tax time. Need to take a course in setting up a website? The cost of the class is deductible, so make sure you keep records. This can be a huge boon to anyone starting a small business. You could take courses or view webinars on running your business, finding clients, and so on. If you’re setting up a small farm or a studio for homemade crafts and goods you might as well take an online course or two to learn some tips and new techniques.
2. Professional Help
If you’re not interested in learning every aspect of running a business yourself, you can always hire outside help. Any time you hire someone to help you with your business, their fee is deductible. If you don’t feel up to the task of managing your own website, just hire a professional designer and deduct the cost. Perhaps you need a lawyer to help handle the legal aspects of running a small business, or a tax expert to help with your returns? Why not hire them all and deduct the costs?
3. Health Insurance Premiums
If you’re leaving the office to work on your own, you might be faced with new health insurance premiums after you leave a plan provided by your previous employer. If you’re self-employed, and your business claims a profit, you can deduct 100% of your health insurance premiums from your taxes. This could give you the freedom to choose a better quality plan for you and your loved ones, while avoiding the fees you incur if you’re not covered.
Any fees you pay to advertise your business or website can be deducted. You can even deduct the cost of hosting your website, as most business websites are just platforms to advertise a product. Even things like fliers and business cards can have their costs deducted from your taxes at the end of the year.
5. Travel Costs and Business Meals
If you can make a strong case that you’re traveling for work or taking clients out to dinner solely for the purpose of doing business, those costs are deductible. If you leave town to attend a meeting or visit clients you can deduct the cost of gas, plane tickets, lodging, and other travel-related expenses.
6. Home Office
This is potentially your biggest area for savings. All you have to do is designate a specific room or area of your home as a workspace, and you can deduct a portion of home expenses for your “home office”. Let’s say your home measures 1,000 square feet, and you designate a 100 square foot room as your office. Your home office would occupy 10% of your total square footage and you could deduct 10% of your rent, utilities, mortgage interest, homeowners insurance, and property taxes. This could potentially add up to a huge write-off, and you might be tempted to make your home workspace as large as possible. Just make sure you can prove you’re using the area solely for work, just in case those pesky tax men decide to audit.
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