Home Business Tax Deductions

Keep What You Earn

Home Business Tax Deductions

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Home Business Tax Deductions

New Edition!

, 15th Edition

Pay less to the IRS

Take tax deductions on your home business without the hassle or cost of an accountant. Home Business Tax Deductions will help you write off:

  • start-up and operating expenses
  • health insurance and medical bills
  • inventory  

This new edition is completely updated to cover the new Tax Cuts and Jobs Act.

See below for a full product description.

 

Available as part of the Nolo's Home Business Bundle

Product Details

For any home business, claiming all the tax deductions you are entitled to is essential to your business’s financial success. Don’t miss out on the many valuable deductions you can claim.

Here, you’ll find out how to deduct:

  • start-up costs
  • home office expenses
  • vehicles, meals, and travel expenses
  • medical expenses under Obamacare, and
  • retirement expenses.

You’ll also learn how to keep accurate, thorough records in case the IRS ever comes calling. Easy to read and full of real-life examples, this book can help you take advantage of all the valuable deductions you are entitled to.

The 15th edition is copletely updated to cover the new Tax Cuts and Jobs Act.

“Whether you’re going to start or have already started your business, you need this book.” -Paul Tulenko, syndicated business columnist

ISBN
9781413325744
Number of Pages
416

About the Author

Table of Contents

Introduction

1. Some Tax Basics

  • How Tax Deductions Work
  • How Businesses Are Taxed
  • What Businesses Can Deduct
  • Adding It All Up: The Value of Tax Deductions

2. Is Your Home Really a Business?

  • Proving That You Are in Business
  • Tax Consequences of Engaging in a Hobby
  • Investing and Other Income-Producing Activities

3. Getting Your Business Up and Running

  • What Are Start-Up Expenses?
  • When Does a Business Begin?
  • Claiming the Deduction
  • If Your Business Doesn't Last 15 Years
  • Expenses for Businesses That Never Begin
  • Avoiding the Start-Up Tax Rule’s Bite

4. Home Business Operating Expenses

  • Requirements for Deducting Operating Expenses
  • Operating Expenses That Are Not Deductible
  • How to Report Operating Expense Deductions

5. Deducting Long-Term Assets

  • Long-Term Assets
  • Deducting Inexpensive Property: The De Minimis Safe Harbor and Materials and Supplies Deduction
  • General Rules for Deducting Long-Term Personal Property
  • Bonus Depreciation
  • Section 179 Deductions
  • Deducting Repairs and Improvements
  • Regular Depreciation
  • Deducting Business Vehicles
  • Tax Reporting and Record Keeping
  • Leasing Long-Term Assets

6. The Home Office Deduction

  • Qualifying for the Home Office Deduction
  • Corporation Employees
  • Calculating the Home Office Deduction
  • Simplified Home Office Deduction Method
  • IRS Reporting Requirements
  • Audit-Proofing Your Home Office Deduction

7. The Pass-Through Tax Deduction

  • You Must Have a Pass-Through Business
  • You Must Have Qualified Business Income
  • You Must Have Taxable Income
  • Deduction for Taxable Income Below $157,500 ($315,000 for Marrieds)
  • Deduction for Income Above $157,500 ($315,000 for Marrieds)
  • Taking the Pass-Through Deduction
  • Strategies to Maximize the Pass-Through Deduction

8. Getting Around Town: Car and Local Travel Expenses

  • Deductible Local Transportation Expenses
  • The Standard Mileage Rate
  • The Actual Expense Method
  • Other Local Transportation Expenses
  • Reporting Transportation Expenses on Your Tax Return
  • When Clients or Customers Reimburse You

9. Leaving Town: Business Travel

  • What Is Business Travel?
  • Deductible Travel Expenses
  • How Much You Can Deduct
  • Maximizing Your Business Travel Deductions
  • Travel Expenses Reimbursed by Clients or Customers

10. Inventory

  • What Is Inventory?
  • Deducting Inventory Costs

11. Hiring Help: Employees and Independent Contractors

  • Employees Versus Independent Contractors
  • Tax Deductions for Employee Pay and Benefits
  • Reimbursing Employees for Business-Related Expenditures
  • Employing Your Family or Yourself
  • Tax Deductions When You Hire Independent Contractors

12. What if You Get Sick? Deducting Medical Expenses

  • The Affordable Care Act (Obamacare)
  • The Personal Deduction for Medical Expenses
  • Deducting Health Insurance Premiums
  • Tax Credits for Employee Health Insurance
  • Health Reimbursement Plans
  • Health Savings Accounts

13. Deductions that Can Help You Retire

  • Why You Need a Retirement Plan (or Plans)
  • Individual Retirement Accounts (IRAs)
  • Employer IRAs
  • Keogh Plans
  • Solo 401(k) Plans

14. More Home Business Deductions

  • Advertising
  • Business Bad Debts
  • Casualty Losses
  • Charitable Contributions
  • Dues and Subscriptions
  • Education Expenses
  • Entertainment and Meals
  • Gifts
  • Insurance for Your Business
  • Interest on Business Loans
  • Legal and Professional Services
  • Taxes and Licenses

15. Record Keeping and Accounting

  • What Records Do You Need?
  • Records of Your Income and Expenses
  • Records Required for Specific Expenses
  • How Long to Keep Records
  • What If You Don’t Have Proper Tax Records?
  • Accounting Methods
  • Tax Years

16. Businesses Owned By Spouses

  • An Employer-Employee Arrangement
  • Establish a Qualified Joint Venture
  • Form a Business Entity
  • Do Nothing

17. Eight Tips for Avoiding an IRS Audit

  • Tip #1: Thorough and Exact
  • Tip #2: Don’t File Early
  • Tip #3: Form a Business Entity
  • Tip #4: Explain Items the IRS Will Question
  • Tip #5: Avoid Ambiguous or General Expenses
  • Tip #6: Report All of Your Income
  • Tip #7: Watch Your Income-to-Deduction Ratio
  • Tip #8: Beware of Abnormally Large Deductions

Index

Sample Chapter

Introduction

This book is for you if you’re one of the millions of Americans who run a business from home. It shows how home business owners can reduce their taxes by taking advantage of the huge array of tax deductions available to them.

Did you know that, if you have a legitimate home business, you may be able to deduct:

  • a portion of your rent or mortgage
  • expenses for local and business trips, and
  • medical expenses for yourself and your family?

All of these deductions—and many others—can add up to substantial tax savings. The IRS will never complain if you don’t take all the deductions available to you. In fact, the majority of home business
owners miss out on many deductions every year simply because they aren’t aware of them—or because they neglect to keep the records necessary to back them up.

That’s where this book comes in. It shows you how you can deduct all or most of your business expenses from your federal taxes. This book is not a tax preparation guide—it does not show you how to fill out your tax forms. (By the time you do your taxes, it may be too late to take deductions you could have taken if you had planned the prior year’s business spending wisely and kept proper records.) Instead, this book gives you all the information you need to maximize your deductible expenses—and avoid common deduction mistakes. You can (and should) use this book all year long, so that you’re ready to take advantage of every available deduction opportunity come April 15.

This year more than ever you’ll need guidance when it comes to understanding your taxes. Congress passed the Tax Cuts and Jobs Act at the end of 2017, the most sweeping change to the tax code in over 30 years. Most of those changes go into effect starting in 2018. We explain the new tax law and how it affects small business deductions including:

  • new individual and corporate tax rates (see Chapter 1)
  • a new 20% tax deduction for pass-through business owners, which includes most home-based businesses (see Chapter 7)
  • changes to bonus depreciation and Section 179 expensing, including substantial increases in the annual limits (see Chapter 5)
  • changes to the annual depreciation deductions allowed for passenger automobiles (see Chapter 5)
  • the elimination of deductions for business-related entertainment and certain meals (see Chapter 14)
  • new limits on deducting business losses (see Chapter 1), and changes affecting the cash method of accounting and deducting inventories (see Chapters 10 and 14).

Even if you work with an accountant or another tax professional, you need to learn about home business tax deductions. No tax professional will ever know as much about your business as you do, and you can’t expect a hired professional to search high and low for every deduction you might be able to take, especially during the busy tax preparation season. The information in this book will help you provide your tax professional with better records, ask better questions, and obtain better advice. It will also help you evaluate the advice you get from tax professionals, websites, and other sources, so you can make smart decisions about your taxes.

If you do your taxes yourself (as more and more home businesspeople are doing, especially with the help of tax preparation software), your need for knowledge is even greater. Not even the most sophisticated tax preparation program can decide which tax deductions you should take or tell you whether you’ve overlooked a valuable deduction. This book can be your guide—providing you with practical advice and information so you can rest assured you are taking full advantage of the many deductions available to home business owners.

Get Updates to This Book on Nolo.com

When there are important changes to the information in this book, we’ll post updates online, on a page dedicated to this book.

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