Nowadays, there are many facilities for an entrepreneur to run his business smoothly. Thus, many self-employed, freelancers, and remote workers make sure to work from their homes. A home-based business can be useful in many different ways. One of the most common advantages of a home-based business is tax deduction.
Working can save you from tax compliance in a way that you can deduct a maximum of your tax amount. However, how much tax you can deduct may also depend on the excellence of your accountant. Therefore, consider hiring the best accountant in your area.
What Is Home Office Deduction?
Understanding home office deduction and its role in taxation is very important to get it completely.
- The simplified method allows you to deduct $5 per square foot up to 300 square feet. It is the very best and easiest tax deduction technique.
- The regular method is somewhat tricky and more difficult than the simplified one. In this method, you need to calculate the % of your home used for business by dividing the area of your home. Office by the area of your home in square feet.
What About The Utilities And Services?
Home office businesses usually use more electricity, heating systems, and the internet. You need to calculate them properly like this:
- About electricity bills, you can deduct the business part of your house according to the office space in your home. If your office is 15% of your home, deduct the bill with 15% and add them to business utilities.
- You can deduct the internet bill of your office by the time you use the internet in the office and add this to business utilities.
- If you have a separate line for your phone, you can also deduct the phone bill from your office’s phone bill and your house’s phone bill.
What About Office Supplies And Equipment?
You can also deduct the office equipment expense for the supplies you bring in, especially for your office.
- Paper, pens, and printer ink expenses will be deducted from the accounts of the year they were originally bought.
- Big equipment like computers and printers will be deducted fully or in a depreciating manner over the years; the rules may vary from state to state.
- Business-related app subscriptions are also deductible from your business accounts.
- Repairs and maintenance of your office space in your home will also be deducted from the repairs and maintenance done in the house or house-related.
Contact Your Accountant Today!
He will help you with the deductions of important expenses from the home expenses in a professional way. He can also help you out in other jobs, such as analyzing and reconciling the accounts, as he is a professional.
