Common Home Business Tax Deductions

One of the advantages of running a home business is the extra tax deductions. You have to be careful, of course, to take them correctly so that if you should be audited you do not get hit with penalties or interest because deductions were disallowed. The home office deduction is often thought to be a flag for audits.

You do have to be prepared to pay the Self Employment Tax, which is the replacement for your employer's contribution to the FICA tax. When you have an employer, they pay half and you pay half. If you have a home business or are otherwise self employed, you pay the whole thing.

Consult your accountant or tax advisor for the best ways to handle these and to ensure that your use of them is correct.

Mileage on your vehicle for business purposes - You will probably want either to keep track of your business miles, including noting your odometer reading at the start and end of the year, or lease a business-only vehicle.
Medical - If you are not covered under a spouse's insurance from work you may have sufficient medical expenses to deduct them.
Business trips are deductable, but the primary purpose of the trip must be business. No visiting Aunt Joan and deducting the cost of the airline tickets unless the visit is mostly business.
Business equipment can be expensed to a certain point.
Your home office can allow you to deduct an appropriate percentage of rent or mortgage interest, utilities, insurance and home maintenance. The exact amount depends on the space dedicated exclusively to your home business.
Business expenses, such as advertising costs, may be deductable as well.

It can be all but impossible to keep up on the tax codes, so it often pays to have your home business taxes done by a professional. However, you should try to be aware of what deductions you may qualify for, to ensure that they are not missed by your tax professional.

It's a Taxing Time of Year - Be ready to pay the taxes on your home business when tax time comes around.
Help! What Legal Structure is Best For My Home Business? - Get help deciding. Protect yourself legally and financially. This can have a major impact on your tax situation.
Should I Put My Spouse on My Home Business Payroll? - It depends on whether or not you can save on your taxes.
Do I Need a Tax ID for My Home Business? - Know when to get a tax ID rather than use your SSN.
How to Prove You Are an Independent Contractor, Not an Employee - Make sure your status is clear for tax purposes.

Please note this is not to be taken as legal advice. Consult a lawyer if you need legal advice.

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Common Home Business Tax Deductions

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