Tip 1 – Maximize Your Home Office Deductions

Money Saving Tips - 12 Days of money saving tips of Christmas 

Home office deductions for entrepreneurs

Every year, more and more entrepreneurs are switching to their home office as their primary place of work.

The Wall Street Journal report self employed Americans who work from home

Do you work from a home office?

Writing off your home office can significantly help put money back in your pocket. For entrepreneurs and self employed this means more cash in hand; for a new contractor? Marketing campaign? A larger PO from your supplier…which may save you more money in the long run. The more money you save, the more money you have to grow and develop your business.

What’s required?

The IRS states there are two basic requirements for your home to qualify as a deduction:

  1. Regular and exclusive use.
  2. Principal place of your business.

Not sure if you meet the requirements? Have a look at how the IRS defines business use of your home

What do I need to know?

It’s important to note that there are two different methods to consider; Simplified option, and Regular Method.

In the simplified option you can claim up to 300 sq ft of space at $5 a sq ft. ($1,500 max)

While the regular method has some calculation, allocation, and substantiation requirements that are complex and burdensome for small business owners. Deductions for a home office are based on the percentage of your home devoted to business use.”

Although easier to manage, the caveat in the simplified option is the only business expenses you can deduct are items unrelated to the use of your home.

Review your largest home office deductions to better decipher which option will work best for you.

 

 

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