Other Home Business Deductions to Avoid
You have set up a legitimate business and you have been careful to set aside an area where you "regularly and exclusively" do business, so you can claim this area for a tax deduction. But there are other home business tax schemes that the IRS warns about:
- Deducting payments to your children for their services, such as answering phones and washing cars
- Deducting education expenses from your children's salaries
- Deducting "excessive" car and truck expenses as business expenses
- Deducting personal travel, meals, and entertainment with the excuse that "everyone is a potential client.
- Deducting personal furniture and other home purchases as "business" expenses.
As you would expect, the IRS carefully monitors home businesses to make sure they don't slip over the line between business and personal expenses. Avoid problems with the IRS by setting up a legitimate business, restricting use of "business areas" to only business use, and avoiding including personal expenses in your business deductions.
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