TAX TIP 5 - HOME OFFICE DEDUCTIONS

If you work out of your home and do not have an office available elsewhere, you will be eligible to take a deduction against your income for a portion of the expenses related to maintaining your home. This is not necessarily a red flag that would trigger an audit if you do it correctly. Your office must regularly and exclusively be used as the principal place of business or as a place where you meet regularly with clients. You do not have to have a separate room, but the space must only be used as an office space and nothing else. (That is why the dining room table does not qualify as a home office!) The office space should be measured and after a ratio of your office space to your total house is determined you can apply that ratio against all of your house related expenses such as mortgage interest, property taxes, repairs, utilities, insurance, gardening, etc. If you are self-employed, not only will you have a saving of income taxes but also of self-employment taxes. Many successful businesses were started out of their home office – take advantage of this opportunity to start your own business!

For more financial articles and tips, go to http://wise-investors.org