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Just as a regular brick and mortar business gets tax deductions,
home-based businesses are also eligible for certain tax deductions
that can help you save some money. It is important to find
out, which expenses can be deducted, in order to get the most
benefit.
Here are some tax deductions that you should be able to
claim, when running your home-based business.
Traveling Expenses:
If you travel by air for any business related work, you
should definitely save your tickets or receipts, so you can
claim those expenses as tax deductions.
If you are using your car for your business needs, then you
can also deduct those expenses, including your fuel bills,
repair bills, insurance and loan repayments. You will also
need to maintain a mileage log of your car. These expenses
will, however be permissible only when you use your car for
business purposes and not for your personal purposes. Even
if you travel out of town for your business, then you can
still deduct your hotel room and meal expenses. However, if
you take your family along, then you will only be able to
claim for yourself and not for your family. If you take any
business associate to lunch or dinner, then these too can
be claimed, provided you have saved your restaurant bills.
Telephone Expenses:
In order to avoid confusion, while filing your taxes, it
is better to install a separate phone line in your home or
purchase a separate mobile phone that caters only to your
business. You can then claim these phone bills as tax deductions.
Home Mortgage Interest:
You can also deduct the corresponding amount of your home
mortgage interest that you are currently using as your home-based
office. The space utilized by your office will be compared
with the total size of your home and the corresponding percentage
will be allowed as a deduction. However, your office space
should be dedicated only for office use, otherwise you will
only be allowed a partial deduction.
Business Supplies And Equipment:
The computer and printer you ues for your business can be
claimed as expenses a deductions. Accounting software packages,
anti-virus programs or any other computer programs along with
recurring expenses, such as computer stationary, postage or
other expenses can also be included in tax deductions. The
cost of your Internet service is a tax deductable expense.
Make it a point to save all the invoices related to your supplies
and expenses, in order to legitimize your claims.
It would be better, if you just save all the bills and receipts
of all your expenses incurred in your home based business
and submit them to your tax consultant, who can then sort
them and claim them under the correct deduction heading. You
should not have any problems with the tax authorities, if
your tax deductions are genuine and you have the necessary
receipts to back your claims.
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