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Tax computing and filing tax returns is a stress filled process. Those who
can afford it hire tax professionals to undertake the tax related tasks. For
others who run home based businesses it is just a matter of knowing what
needs done.
As a home based business owner what you must do is not confuse your personal
tax returns with that of you home based business. It is important to create
and maintain a filing system whereby receipts, bills, and so on are not just
recorded in a spreadsheet but filed safely in case the IRS requests for it.
Did you know as a home based business owner you are eligible for many tax
deductions that individuals are not entitled to? Check whether you have been
availing the following:
1. Tax deductions for business related expenses. Make a note of your business
related expenses and check with the IRS website or a tax advisor whether any of
the expenses are eligible for deductions.
2. Membership to any business chain or purchase of a franchise, expenses
for kits and so on get tax deductions.
3. Office supplies like stationary, computer paraphernalia, business
cards and so on are all eligible for tax deductions.
4. Advertising in magazines and newspapers or sending out direct mailers
is a tax write off. However you need to maintain detailed documentation.
5. If you have a promotion in place that entails giving away of freebies
then the cost of freebies can be written off in your business taxes.
6. Phone bills, fax bills, and internet connections all used exclusively for
business purposes warrants a tax deduction. So be sure to file all bills and
receipts properly.
7. If a room or space at home functions as the home based business office
then the space ‘rent” warrants a tax waiver as the rent is clubbed as an expense.
8. Costs of postage, courier, bank fees, and credit card fees for business
related use, and memberships to professional bodies are all eligible for tax
deduction in the case of a home based business. So, keep a track of all
expenses and always keep business related credit cards separate from ones
for personal use.
9. Purchase of machinery for the business as well as its maintenance can
be claimed even purchase of a computer for business use. Depreciation can be
claimed on cost of computers, fax machines, and other machines purchased for
business use.
10. Cost of fuel and maintenance on automobiles used for business purposes
can be claimed as a business deduction.
11. If family members help in running the business then any allowance you
give them is eligible for deduction. So your kids to help clean, file or run
errands can become tax deductions.
Before compiling your taxes and filling in your tax return forms read the
detailed information given by the IRS for home based business taxes at :
http://www.irs.gov/pub/irs-pdf/p4035.pdf . If you need any clarifications
call the IRS at: 1-800-829-1040. Access the information and publications at:
http://www.ustreas.gov/irs/ci/ and http://www.irs.gov .
Home based business owners can benefit greatly by educating themselves on
tax laws and staying abreast of new developments in taxation and filing
of tax returns.
About Author
Barry Allen is a freelance writer for Online Tax
Firm, the premier website to find tax, return tax, tax software, free tax filing, sales tax,
services tax,income tax, property tax and many more.
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