Qualify for Extra Tax Breaks With a Home Business
Running a business out of your home has many advantages
The amount you can deduct for home office expenses can't be more than your business's net income, after you've deducted your business expenses, like supplies, travel expenses and phone charges. For example, if you have $4,000 in deductions, you can deduct the entire amount, as long as your business had at least $4,000 in net profit. Home office expenses that exceed your net income can be carried over to succeeding years as a loss.
To qualify for these tax breaks, your home office must be the main place where your goods and services are provided to customers and your revenues are generated. You can maximize your tax breaks, and keep more of what you earn if you:
Use your home office exclusively for business. The IRS won't let you take a deduction for your kitchen, just because you use the kitchen table as your desk. You must have a separate room or partitioned area that's devoted to business use.
List your home address as your principal place of business, even if part of your business, like a warehouse, is outside your home. Make sure you have a desk, filing cabinet and separate phone line for your business.
Store your merchandise or supplies on your property — in a detached shed, spare closet or your garage — instead of renting a warehouse. You'll save on rental costs and get a tax break for the space you use.