Are you a business owner who primarily works from home? If so, you could be eligible for home office deductions that will help reduce your taxable income and save you money.
However, it's essential to document all your deductions to avoid any issues with the IRS.
To qualify for a home office deduction, you need to calculate the percentage of your home that is used exclusively and regularly as an office. Then, you can apply this percentage to the total annual expense amount in each category listed below to calculate the amount you can deduct. Note that these deductions cannot take your business net income to a loss.
Here are some of the expenses that can contribute to your home office deduction:
Utility Expenses (electric, water, gas, etc.)
Rent/Mortgage Interest and Property Taxes
Any expenses that were incurred to set up/build out the home office are 100% deductible
For example, let's say that 30% of your home is used exclusively and regularly as an office, and your electric bill for the year is $6,000. You can deduct $1,800 of your electric expenses as a business expense.
In conclusion, if you're a business owner who works primarily from home, take advantage of the home office deductions to reduce your taxable income and save money. However, ensure you document all your deductions to avoid any legal issues with the IRS.
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