If you are a business owner or contractor who provides services to other businesses, then you are considered self–employed, according to the Internal Revenue Service.
As a small business owner you may have a home office space, a corporate office space or both.
As the year-end approaches, in preparation for tax time, don’t forget that if you use a portion of your home for business, you may be able to claim certain home office deductions.
There are numerous advantages to creating your own home office.
This includes the convenience of not commuting to an office, being able to work on projects immediately, and having a comfortable place to manage your business. Additional monetary perks of creating a home office is the ability to deduct home office expenses and related expenses for tax purposes. This simply means that by being self-employed, you can enjoy a lessened tax burden through claiming certain business expenditures.
Every entrepreneur should be aware of the home office deductions available and consult a small business tax professional. Here is a short list of common expenses that can be claimed on your business tax return:
1. Home Office Design
If you are considering creating a new home office, remodeling your existing one, incorporating new decor or replacing worn items you should consider claiming these home office expenses on your business taxes.
The most obvious home office design expenses that can be claimed on tax returns are materials used for your home office design. This includes carpeting, paint, tiles, wallpaper, etc. that are used in your office.
2. Mortgage Interest, Real Estate Taxes and Rent Payments
If you rent or own your home, and make mortgage payments, you can include a segment of your rent fees in your tax returns. You must however, prove that your home office space is to be utilized at a regular basis, and is exclusively considered a home office.
For example, “The Internal Revenue Service provides tax deductions for homeowners by allowing them to deduct mortgage interest paid and real estate taxes paid for a primary and secondary residence. Unfortunately, rent paid for an apartment is not deductible if the apartment is only used as your primary residence; however, if you open a small business, even on a part-time basis, and conduct the operations of that business from your apartment, you can deduct part of the rent paid as a home office deduction to the extent that the business has income to support the deduction.”