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home business's tax deductions

Discussion in 'Parents Off Topic' started by fredntan2, May 8, 2008.

  1. fredntan2

    fredntan2 Approved members

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    Apr 21, 2007
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    I'm going to be starting a home business selling with Uppercase Lettering.
    Does anyone recommend a book to help me with taxes/or a website? I heard there are all kind of tax writeoffs with home business's, plus I can get the stuff cheaper for my house!
     
  2. Nancy in VA

    Nancy in VA Approved members

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    I suggest that you download the IRS tax guidelines for Schedule C. They are cracking down on home businesses a lot. Don't be snowed by some of the "accountant" suggestions for taxes. If you would use it in your personal life before, or after you had your business, you cannot deduct it. You cannot deduct your first phone line into the house - you can deduct the 2nd. You cannot deduct a cell phone unless you ONLY use it for business. You cannot deduct a home computer unless there is absolutely nothing personal on it and it is not used for personal use AT ALL - kids cannot play on Webkins on it at all to have it be a deduction.

    Other than that, keep good receipts. For your office, if it is used EXCLUSIVELY for business (meaning you can't store family stuff in there period) you can take the sq ft of it and compare it to the size of your house - to get a % of office space of the house. Then you can use that to take some portion of utilities, but its not a straight % calculation because of weekend and holidays, etc.

    Sorry I don't have a lot of "suggestions" for deductions, more warnings. It just that an IRS tax audit is NOT where you want to head.
     
  3. WestinsMom

    WestinsMom Approved members

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    I have been told it is not beneficial in the long run to claim a home office. Your home is appreciating. When you claim the depreciation of a home office you have to reclaim it when you sell. At least that is my understanding :)
     
  4. usbornetheresa

    usbornetheresa Approved members

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    Aug 30, 2006
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    I use Turbo Tax with schedule C. It has a great interview process so you know what you can/can't write off. Keep your receipts for everything and good records of the miles you drive.
     

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