Tax Deductions In A Home Office

Is a home office deduction available to you as an Internet Marketer or home business owner

? If you local tax law allows, you could stand to benefit from a signicant tax deduction.

This means that, if you qualify for these tax breaks, you can deduct your business expenses and reclaim the basic funds that you used for your online business. Of course, because the Inland Revenue is very strict about who qualifies for a home office deduction, it's important to make sure that you meet the qualifying criteria.

IMPORTANT: The information in this article applies generally, but the rules in each country may vary. Be sure to check the website of your local tax office for more information

The business expenses that you claim for should be carefully reviewed and calculated so that the Inland Revenue perceives them as normal and not outside the realm of reason. Claiming too much in this area could result in a visit from the tax man and probably a time-consuming audit.

To qualify for a home office deduction you must have a room or specific area in your home solely dedicated to your online business, and you have to be able to prove that you work there at least some of the time. Your main business dealings should be done in that room or area including client meetings and administration.

At the end of every month you will be able to claim money back from the Inland Revenue on electricity that was exclusively used for your business. The rule of thumb to calculate the portion of electricity that goes to the business each month is to divide the total amount by the number of rooms in your home.

Another method of calculation is to measure the square footage of your home and office and deduct the office size from the main house, in order to gauge correct percentage rates of payment.

It's possible that you could even be able to claim back some of your mortgage payments. A prudent step would be to obtain the services of an account who can advise you how to work out the appropriate amounts.

Additionally, business expenses can include repairs, maintenance and water bills. Save your bills and keep an accurate record of your weekly operating costs so that, when the time comes, it's not that difficult to settle on a number to reclaim. Unfortunately, things like entertainment, phone lines (unless you have a separate, dedicated phone line) and internet costs cannot be claimed back.

Your home office deduction can help your small online business survive. If you are operating a legitmate home business, you should definitely look into claiming back some of your expenses. Whether you are a self employed home business owner or an employee working in a home office for someone else, you should investigate whether you qualify for benefits and tax relief.

by: David Congreave

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