Posted by Caril on 2/6/04 9:00am
Msg #888

Tax Question

This will be my first year for filing for self employment under this profession. Does anyone know what we can deduct from your home as far as what % of the utility bill of the room that we use for this buisness or should I take all my detailed records, receipts, and invoices to a professional CPA? Any other info would be appreciated in regards to deductions as well

Caril

Reply by Carolanne_PA on 2/6/04 12:30pm
Msg #890

Since this is your first year I would recommend taking your information to a tax professional. It doesn't have to be a CPA. There are many qualified tax consultants out there. Just make sure they have stayed current in the field and they understand how to treat notary income.

The percentages of utilities are computed on a Business Use Of Home form. The square footage of the office compared to the overall square footage of the home determines the business use percentage. This is then applied to all indirect expenses.

I'm sure you have incurred other expenses. Usually an expense is deductible if it is considered to be ordinary and necessary.

Also remember that some purchases are subject to the rules of depreciation.

Reply by Renee Ann on 2/8/04 10:36am
Msg #898

I would definately suggest using TurboTax (turbotax.com) they have a premier version priced at $59.95 and it walks you through the home office deductions. (And the price of the software is deductible!!) Finished mine yesterday, I too am a first year self-employed and the home business section is very well done. Good luck.

Reply by Nicole_CA on 2/9/04 6:49pm
Msg #910

One very important thing to remember is that the IRS is very specific about the home office deduction and taking it will almost surely raise a flag for an audit so make sure that you are really eligible. The room has to be used solely for business purposes. If it is a guest room/office it doesn't fit. Consult a tax advisor or if you use Turbo Tax make sure you answer their questions honestly. We all want to take the deduction but how many people really only use a specific room solely as an office. If you take the deduction make sure you can back it up. The IRS suggests that you take photos of the room or keep a log of the amount of time spent in there and what you do while you are there.

Reply by Liz on 2/11/04 11:29pm
Msg #926

I used TurboTax and it asked me, specifically, how many feet is used for work and then asked out of 100% how much is used for business. I gave an honest representation of 75%, most likely more. My home is 2300 sq. ft. and only 15 ft. is used for business. Botom line my tax break was like 12 bucks.