West Tax|Western Tax and financial Information

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Now, our topic is “4 common tax myths all home business owners should be aware of”. Now on home office is get a bad wrap. There’s so many rumors out about the home office deductions that you may want to avoid the whole subject. But if you have a home office and not deducted it, you could be missing now about on some very valuable tax savings. Lets take a look the trurth behind the myths about the home office deductions.

So, starting with the myth number 1, is that the home office deductions is a red flag for an audit. 20 years ago, this might be true, simply because it’s unusual. But now, the home business seems almost  as popular as home ownership. Millions of individuals operate some kind of business activity out of their homes, others telecomute and deduct their home office expenses and itemize deduction. The home office deduction is no longer an automatic flag for an audit. The key to avoid the audit is reasonableness. The IRS uses computer analyzes on all tax returns. Any deductions and your income, then the benchmark to your industry may be question. So bottom line, deducting the portion of your home expenses as a cost of operate home business is has expected.

Then, myth number 2, if i take the home business deductions, i can deduct all the costs of my home. You can deduct the portion of your home expenses as a home office expense based on the square footage of your home office space. Your home office space must be used exclusively for business. Your kitchen will not qualify as home office space simply because you use the table to complete the paperwork. For use the space for personal and business is does not qualify. Now the easiest way to keep tracking this is the basic need of your room or rooms for your home office purposes. If you don’t have the complete room to use as the home office, then use furniture to saparate the persoal part from business space. Of course ther is an exception for this rule. If your business is a house-sale retail and youu do not have any other fix location, you can include any spaces you use for storage or storage as the part of your home office. The space does not have to be
exclusively, but must be used regularly and suitable for storage. So bottom line, calculate the square foot that you use exclusively for business and the square foot that you use as storage inventory to determine your home office deductions.

Myth number 3, i can only take the home office deduction if i work at home exclusively. That’s an old rule! The congress expanded the home office deductions to allow business owners without any other fix business location to take home office deduction regardless a number of hour that they spend at home. If you provide services to customers or clients to their location, you still qualify for the home business office dedcutions. You simply must use your home office for administrative or management duties. Bottom line that you can deduct your home office as long as you don’t pay for other office space to run your business.

Now myth number 4, the home office deduction will make me lose my tax exclusion on the sale of my home.now the rules has change for you too. If you use 10% of your home for business purposes, you no longer have to recognize 10% you gain on the sale that could be excluded if you met the requirements for the sale of your principal residents. Now what you need to do is include any depreciation deduction you took in prior years as a tax locate no gain. You still benefit because your capital gain rate most likely lower than your ordiary income tax rate. Your depreciation deduction can also reduce your self employment taxes. So bottom line, you could still save taxes overall but taking the home office depreciation deduction each year.

Operating your business from home is a very smart move financial for the new or small business owners. You can save yourself thousands dollars on rent by operating that home rather than renting business space. But the costs of housing your business are expenses and you should be treating that way. You will not hesitate to deduct rent expense for your business, treat your home business the same way. The tax money you save can be use to grow your business or even to fun your family vacation.

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For years, Dr. Ron Mueller has made his patients to research the hidden tax advantages available to home-based businesses. And he has become America’s leading home business tax expert. He found the secret to increasing your tax refund by thousands of dollars every year. “for the average american workers, there are a part-time home-based businesses. If the american understood the five biggest tax breaks, they’ll be able to put $3,500-$5,000 extra cash on their pocket from additional tax refund. This above and beyond whatever refund they may have gotten before. Congress pay a lot tax breaks for home business, but if you don’t know what they are, it doesn’t has any good. The more you know about the tax deduction is, the less you owe. You can not take advantage of tax deduction you don’t understand. And you can’t take advantage the tax deductions for which you don’t keep on record. Here’s an example, if you have and earn millions of dollars, and you make your tax under-controll, then you are a millionaire.

It’s how much you keep the counts, not how much you make, and you can keep a large portion of what you make if you really understand taxes and take advantages of tax breaks that are legals. “So, when did this tax breaks apply? When can a home-based business start using them? The very first day they get in home-based business. As long you can show what you’re working on becoming profitable, that’s all it take. You do not have to make a profit, or even any particular numbers for years.