All businesses, no matter what type, are in the same standing when it comes to tax requirements. The IRS requires everyone, especially business owners, to declare all of their income, file their tax returns and pay all applicable fees. This mandate extends to
To claim for tax deductions,
For it to qualify as a home office, a particular space or room must be primarily used for business, like daily operations and client meetings. Although you are given leeway in dividing the time spent for each room, whether business or personal, you might want to keep it simple. Claiming that a room is utilized for business operations 100% of the time instead of 75%-25% for business and personal uses, respectively, is a more beneficial alternative. This strategy will keep you away from potential IRS problems.
Another major stipulation for a space to be considered a home office is that it must be considered as your principal business rendezvous. Online entrepreneurs generally find this stipulation quite easy to attain since they operate completely from their homes most of the time anyway. Basically, the IRS wants to make sure that all business-related activities you carry out in your home office, is not also accomplished any place else, specifically places like rented offices or suites.
These two main requisites, when met, will definitely allow you to deduct many costs associated with your office and home. Among other things, these costs include rent or mortgage payments, insurance costs, utility bills and property taxes. You cannot, on the contrary, deduct all of your rent or mortgage payment. The way it works is usually through a percentage computation. If your office makes up for 25% of your home, and your mortgage payment is $1,000 per month, then you would be able to deduct 25% of that $1,000 which is $250. So every month you would be able to deduct $250 which totals to $3,000 per year. This is essentially how you should deduct expenses concerning your home office. In addition, keeping updated records of your