WWhen it comes to filing your taxes, you want to make sure you’re doing everything right, but also that you’re as efficient as possible so you don’t lose out. If you have a home office, for example, you might qualify for tax relief, so read on to find out how to get the most out of it.
As a self-employed person, deductions and expenses might help you save a bit as you can offset some of your costs with your income to lower your overall bill. There are limits, however, and the rules on deductions changed in 2017, so it’s important to be well informed about the latest regulations.
What are the home office expenses?
If you work from home, you may incur expenses related to your work which can then be deducted when calculating your tax bill. This can include things like utility bills or rental or mortgage payments.
What can I deduce?
If you are paying for utilities and utilities, such as a business phone line, for the sole purpose of your job, the full cost of those may be deducted. The same goes for office supplies and equipment.
Office space itself, however, is only eligible for deductions if it meets the following criteria:
- It is used exclusively and regularly as the main place of activity
- It is used exclusively and regularly as a place where you meet or deal with patients, clients or clients in the normal course of your business or business.
- It is a separate structure that is not attached to your house and that is used as part of your trade or business
- It is used regularly for certain storage uses
- It is used as a rental for your business
- You use your home as a daycare
How do I calculate my home office deductions?
There are two ways to claim home office deductions: the standard method and the simplified method. The standard method is to calculate all of your home office expenses and keep itemized receipts in case the IRS wants to audit you.
There are a lot of things to consider here, for example, if the space you use for your home office takes up 10 percent of your home’s floor space, then you can claim only 10 percent of your bills. utilities, not the total amount. Also, if your expenses are greater than your income, you will not be able to claim the full amount.
How does the simplified method work?
Alternatively, you can use the simplified method, which involves calculating the square footage of your home office and multiplying it by five dollars. This method has a maximum of $ 1,500, but can be useful if you’re pressed for time or don’t have specific records handy.