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Everything You Need to Know About Taxes for Your Home-Based Business

Taxes and Deductions for Home-Based Businesses


Your home-based business is in a unique tax situation. Certain deductions are available to home-based businesses, but you must keep good records and determine the business portion of your home expenses. This article will help you learn more about home-based business tax deductions.

1. Understand the "Principal Place of Business" Concept

Before you start taking those tax deductions for your home business, you must meet the IRS qualification that your home is your principal place of business. This article details the IRS requirements and includes some examples to help you sort out this complicated issue.

2. New for 2013: Simplified Home Office Space Calculation Method

The IRS has announced a new simpler calculation method for home office space deductions. You can deduct home business costs for the space used "regularly and exclusively" for your home business, using the old calculation or the new simpler method. If you have a smaller space, the simple method can save you time and mistakes.

3. Calculate Your Home Business Space Deduction

Calculate your home business space deduction.

4. Home Office Expenses Deductions

What expenses you can deduct for your home-based business.

5. Prepare for an IRS Audit of Your Home Business

Are you prepared for the IRS to come to your home to inspect your home business?  The IRS wants to be sure you are not violating the requirement that your home office be used "regularly and exclusively" for business purposes.  CPA Gail Rosen answers some questions about use of the home office for personal reasons.  

6. Other Home Based Business Expenses

Some other home based business expenses you can deduct.

7. Deducting Home Based Business Telephone Expenses

You can deduct phone expenses for your home based business. Here's how.

8. Paperwork Needed for Calculating Home Business Deduction on Form 8829

To complete Form 8829, you will need to gather some paperwork related to home business expenses, such as costs for mortgage interest, property taxes, and home expenses. Here is a list of the information you will need.

9. Use Form 8829 to Calculate Home Based Business Expenses

To correctly calculate deductions for business use of your home, you will first need to use IRS Form 8829 to determine the deduction percentage.

10. Limits on Home Based Business Deductions

Home based business deductions are limited.  You can deduct home business expenses to reduce y our business income for the year, but you can't deduct these home business expenses if you had a business loss. Read the details on this limitation.

11. Home Based Business Tax Schemes to Avoid

If you are looking for a home business opportunity, here are some things you need to know about tax schemes, to avoid IRS scrutiny.

12. And Home Based Business Tax Deductions to Avoid

A list of IRS-targeted home based business tax deductions to avoid.
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