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Home Business Tax Deductions Print E-mail
Working from home is a dream for many.  With a range of tax deductions available, it's becoming easier to make the dream a reality.

Individuals who are self-employed, or are planning to start a home-based business from their home, should make full use of one or more of the following home business tax deduction provisions:

Home Office
The part of your home used solely for business functions is considered to be your home office.  You can benefit from the home office deduction only if you use this office regularly and exclusively for business purposes.  Indirect expenses and depreciation may also be deducted.

Business Vehicle
If you use a vehicle to carry out your business, you may deduct the business cost of the car. Costs associated with operating and maintaining the car may also be deductible.  The deduction can be based on the IRS mileage rate, or on your actual costs, whichever is more beneficial to you.

Personal Assets
You can claim deductions for personal assets used to run your business, like computers.  You must be able to qualify the percentage of business use in order to receive the deduction.

Gifts and Entertainment
Entertaining clients and customers is a crucial part of business.  Fortunately, you may claim one-half of your business-entertainment expenses.  It is sometimes necessary to offer lavish gifts to important clients.  In these cases, the entire cost of the gift is deductible.

Business Journeys
Costs incurred on airline tickets, internal transportation, hotels, shipping and even tipping may be tax deductible.  You may claim meals at half the amount paid.  Travel expenses of employers, business partners and clients are also deductible.

Payments made when saving toward your retirement are deductible from your personal income tax. Therefore, the dollars you spend for your retirement plan can grow tax free in your business until you retire.

Family Connections
Hiring your children as legal employees in your business can allow you to transfer funds in their name. Since children fall in a lower tax bracket, they may not have any tax liabilities.  Only children aged eight and over can be hired, and the work allocated to them should be such that they can perform it without mental or physical strain. You may also hire your parents as employees, thus saving the costs associated with taking care of them.

Social Security
As a self-employed worker, you are required to pay double the social security contribution. Fortunately, one-half of this contribution is tax deductible in the 1040 form.

If you own or are considering starting a home-based business, be sure to take advantage of all the tax deductions that are available to you.  Be your own boss, and enjoy the tax breaks.
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