There are quite a few tax savings when you work at home, but when tax time comes you may end up with a large bill if you are unsure of what you are doing. Fortunately for you, many tax deductions are legitimate when you work at home. It will offset the taxes and sometimes give you a refund each April.
Save every receipt concerning the expense of running your car. An example is if you drive somewhere to meet a client or going to a conference relevant to your profession, you need to keep a record of the mileage back and forth. This included receipts for parking and tolls related to business transportation. A portion of this expense you will be able to deduct from your taxes as business expenses.
You can also deduct a portion of your utility bills, electric and water bills, from your taxes if you have a home business. The entire cost will not be deductible, because you use your home for personal reasons as well, but you will be able to deduct the portion used for business.
Determining the portion of your electric and other utility bills to deduct, measure the area of your home used for business and find out the percentage it represents of the entire square footage of your home. Now you have the percentage of your home that is used for business. This percentage can be taken off your utility bills. If you use 10 percent of your home for business, you can deduct 10 percent of your total electric cost for the year from your taxes. But to be sure, contact a tax professional. There are special rules for phone expenses, so here again a professional should be consulted to determine the appropriate deduction.
Home Business Taxes
When you buy office supplies such as paper, staplers or scissors, keep the receipts. These items purchased for business and used only for business purposes, qualify as deductions on your tax return.
Once you are in business for yourself, don't try to do the taxes yourself. You should hire an accountant to take care of the tax questions for you. An accountant can maximize your savings in taxes and make additional suggestion for savings of money during the year. Your accountant will determine your estimated tax payments so that you can pay taxes throughout the year avoiding penalties and interest.
Keeping track of everything related to your business is important, avoiding a large tax bill at the end of each year. When your business is growing, pay taxes throughout the year, claiming as many deductions as possible saving you money at tax time.