Category Archives: Deductions
Deductions
Home Office Deduction
If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. The home office deduction is available for homeowners and renters, and applies to all types of homes, from apartments to mobile homes.
There are two basic requirements for your home to qualify as a deduction:
1. Regular and Exclusive Use.
You must regularly use part of your home exclusively for conducting business. For example, if you use an extra bedroom to run your online business, you can take a home office deduction for the extra bedroom.
2. Principal Place of Your Business.
You must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business.
Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.
Additional tests for employee use.
If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests discussed above plus:
Your business use must be for the convenience of your employer, and
You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.
If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.
Most Overlooked Tax Deductions
| If you are one of the millions of Americans who throws all their receipts, credit card and bank statements into a box, you are likely to overlook hundreds of dollars in tax deductions when preparing your tax filings.Here are 25 deductible expenses you don’t want to overlook. 1. Medical transportation expenses including tolls, parking, and mileage for trips to doctor’s, health facilities, laboratories. 2. Prescribed medical aids such as crutches, canes, and orthopedic shoes 3. Hearing aids, eye glasses, and contact lenses 4. The cost of alcohol and drug abuse programs, and certain smoking-cessation treatments 5. Education expenses you paid to maintain or improve job skills (including professional books) 6. Professional journals, magazines, and newspapers that are job-related 7. Cost of safe deposit box used for to store investments or investment information 8. Required uniforms and work clothes not suitable for street wear 9. Union dues. 10. Job-seeking expenses within your present field of employment – from printing resumes to phone charges. 11. Dues to professional organizations and business gifts up to $25 per customer or client 12. Cellular phones required for business 13. If you are self-employed, half of the self-employment tax paid 14. Self-employed health insurance premiums and long-term care insurance premiums up to the annual limits. 15. Fees for tax preparation or advice, including software like TurboTax if you meet limits 16. Services of a housekeeper, maid, or cook needed to run your home for the benefit of a qualifying dependent while you work 17. Penalties paid on early withdrawal of savings 18. State income taxes owed from a prior year and paid in the tax year-with your last return 19. Mileage incurred in performing charitable activities 20. Gambling losses to the extent of your gambling winnings – but be prepared to document this 21. The cost of employment agency fees or commissions in certain cases 22. Home office expenses, if your home is your primary place of business 23. Cash and non-cash contributions to qualified charities 24. Reservist and National Guard overnight travel expenses 25. Worthless stock or securities – but you must follow the prescribed rules. |
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