Tax Breaks or Tax Mistakes Part 2

There’s no place like home. Most self-employed taxpayers’ businesses start as home-based businesses.  Portions of business costs are deductible.  If your gross income from your business exceeds your total Houseexpenses, then you can deduct all of your expenses related to the business use of your home

If your gross income is less than your total expenses, your deduction will be limited to the difference between your gross income and the sum of all business expenses you would pay if the business was not in your home.

OfficeThose expenses could include telephone lines, the Internet, and other costs to do business. You must also have a home office that is truly used for work. The IRS usually requires documentation of this, but the one to check with again is your tax accountant or CPA.

If you travel for business, even short distances within your own city, you may deduct airplanethe dollar value of business miles traveled on your tax return. The taxpayer may file the actual expense he incurred, or use the standard mileage rate prescribed by the IRS, which is 57.5 cents as of 2015. The IRS allowable mileage rates should be checked every year as they can change.

If you decide to use actual car expenses, be sure to include payments, depreciation, registration, insurance, garage rent, licenses, repairs and carmaintenance, and parking and toll fees. If you decide to use the standard mileage rate, it would be in your best interest to keep a log – daily, weekly or monthly – of miles driven to distinguish personal use from business use.

Other deductions that can be easily missed are advertising and promotional expenses, banking fees, and air, bus, or train fare. woman on phone

Being an entrepreneur may involve much work and dedication. However, when you are involved in work that you are passionate about, it is far less taxing then doing something that might not excite you as much.

Are you doing what you love and loving what you do?