You can now decrease your tax bill with the home office tax deduction easily by managing your own home as your workplace. Using your home for business purposes will make it possible for you to cover certain household costs like rent, insurance, depreciation, utilities, real estate taxes, mortgage interest, improvements and repairs.
For you to benefit from this deduction, you will have to meet with some of the elementary requirements. The first requirement is that you preserve a specific area of your home for your business. This entails the following: that you use the house for business on a regular basis for a certain number of hours every day or a certain amount of days each week.
Also, you will have to insure that other activities in your home do not get mixed with the business area in your home. For example, your business space can’t become a guest room or other room by night. It’s okay though, to use the space you allocate for storing office supplies for example, as personal space.
Moreover, only genuine businesses, showing clear profits and losses can be granted the home office deduction. If your business activity is more of a hobby than a true commercial activity chances are it won’t qualify for the tax deduction.
As well as using your home on a regular and exclusive basis for business, your home must also be your major place of business. This means that if you tend to work from two or more spots, then out of all of these places, your home has to be your chief ‘office.’ You can ensure this if you use your home’s working space for most of your managing and administrative work.
Nevertheless, it isn’t obligatory that all the activities which take place at home should be your main source of income. It is vital though that your home be used for book keeping, ordering products, planning your meetings and also for conferences with clients, customers or patients.
If ever you are asked to provide proof that you are using a section of your home as an office, then you should have the following elements ready:
1. Have a diagram drawn out to show which part of your house is being used for your business. If you can, take some photographs to give the person a better idea.
2. Insure that all the business mail comes directly to your home.
3. Your business visiting cards and your stationery must have your home address as your business address.
4. A separate phone line should be installed in the business section of your house.
5. Keep track of your client’s or customer’s visits to show that you have actually accomplished business at home.
Elliott Dawson is a contributing editor at DebtFinanceArticles.com. This article may be reproduced provided that its complete content, links and author byline are kept intact and unchanged. No additional links permitted. Hyperlinks and/or URLs must remain both human clickable and search engine spiderable.