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Tax Write-Offs for Home Based Businesses

written by: C.D. Crowder•edited by: Michele McDonough•updated: 4/3/2010

Anyone with a home based business knows how many out of pocket expenses there are to running a business. When tax time comes, don’t miss out on all the tax write-offs available just for home based businesses. Put more money back into your pockets and business with these popular tax write-offs.

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    Business Supplies

    Keep all receipts for all supplies you purchase for your business. This includes pens, pencils, paper, paperclips and anything else you purchased for use in your business. Store all receipts and circle or highlight every item that qualifies. Any items you don’t use in your business cannot be deducted.

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    Home Office

    This is the trickiest deduction for home based businesses. The area you use as your home office must be used exclusively for your business. For instance, if you use your bedroom as your office, you cannot consider this as a deduction since you also use your bedroom for sleeping.

    To take the home office deduction, set an area to the side strictly for business use. The area doesn’t have to be large, just a simple desk and chair is all that’s required. Take a picture of the area and measure it. The percentage of space your office takes up is the percentage of your mortgage or rent you can deduct from your taxes. For instance, if your home office occupies ten percent of the space in your home, you can deduct ten percent of your mortgage or rent from your taxes.

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    Advertising

    Any money you spend on advertising can be deducted from your taxes. This includes printing flyers, placing ads in newspapers and magazines, placing ads and banners on websites and television commercials. Any advertising for your business qualifies.

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    Utilities

    Phone calls, Internet service, electric bill and any other business related utilities are home business tax write-offs. Utilities work the same ways as the home office tax write-off. If your utilities are shared with others or for anything other than business use, you must calculate the percentage used for your business. For most home based business owners, a separate phone line and Internet service is recommended.

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    Computers

    Computers and computer supplies such as printers, routers and software are all tax deductible. These items are only deductible in the year they were purchased. These items must be used exclusively for business. This means if you share a computer with your family, you cannot legally deduct it from your taxes.

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    Subscriptions

    Subscriptions to magazines, professional organizations, websites and any other business related subscriptions are considered home based business tax write-offs. Each year the subscription is active, you can deduct the cost of the subscription from your taxes.

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    Insurance

    Home based business owners must purchase individual insurance for themselves. The IRS allows the self-employed to deduct their insurance premiums from their taxes. No matter who your provider is, you can write off the premiums.

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    Professionals' Fees

    If you have an accountant to handle your taxes and finances, you can deduct their fees from your taxes. Professionals aren’t limited to accountants. If you have equipment repaired, you can deduct these fees as well.

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    Licensing and Education

    If your home based business requires licensing and any type of continuing education, you can deduct these expenses. Classes taken at local colleges, private education centers, conferences and universities are all legal tax write-offs for home based businesses.

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    Other Considerations

    Never deduct an item from your taxes if you do not have proof that the item was used in your business. Keep all receipts, bills and even photos of your workspace in a file. Use this file to do your own taxes or to take to your accountant. This proof will prevent any problems if you are audited. If you are uncertain about a deduction, consult a tax professional.