Home Business Tax Deductions

Keep What You Earn

Home Business Tax Deductions

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Home Business Tax Deductions

New Edition!

, J.D.

, 13th Edition

Take tax deductions on your home business without the hassle or cost of an accountant. Completely updated for your 2016 tax return, Home Business Tax Deductions will help you write off:

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

See below for a full product description.

 

Available as part of the Nolo's Home Business Bundle

Pay less to the IRS

Completely updated for 2016 returns!

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 and travel expenses
  • entertainment and meals
  • 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.

Includes the top home business deductions—the most valuable ones and how to claim them.

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

ISBN
9781413323214
Number of Pages
488

Introduction

Your Home Business Tax Deductions Companion

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
  • Section 179 Deductions
  • Bonus Depreciation
  • 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. Eating Out and Going Out: Deducting Meal and Entertainment Expenses

  • What Is Business Entertainment?
  • Who You Can Entertain
  • Deducting Entertainment Expenses
  • Calculating Your Deduction
  • Reporting Entertainment Expenses on Your Tax Return

8. Getting Around Town: Car and Local Travel Expenses

  • Deductible Local Transportation Expenses
  • The Standard Mileage Rate
  • The Actual Expense Method
  • How to Maximize Your Car Expense Deduction
  • 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?
  • Maintaining an Inventory
  • Deducting Inventory Costs
  • IRS Reporting

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
  • 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. Staying Out of Trouble With the IRS

  • What Every Home Business Owner Needs to Know About the IRS
  • Tips for Avoiding an Audit

18. Help Beyond This Book

  • Secondary Sources of Tax Information
  • The Tax Law
  • Consulting a Tax Professional

Index

Introduction
Your Home Business Tax Deductions Companion

This is a book about income tax deductions for home business owners. A tax deduction is money on which you don’t have to pay taxes. The government has decided that business owners don’t have to pay tax on income they spend for certain business purposes. So, the trick to paying lower taxes—and keeping more of your hard-earned dollars—is to take advantage of every tax deduction you can.

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
  • half the cost of business-related meals and entertainment, and
  • medical expenses for yourself and your family.

All of these deductions—and many others—can add up to substantial tax savings. Depending on your income tax bracket and the state where you live, every $1,000 you take in tax deductions can save you from about $280 to more than $400 in taxes.

Business owners—whether they work at home or in outside offices—live in a different tax universe from wage earners—who work for other people’s businesses or for the government. Wage earners have their income taxes withheld from their paychecks and can take relatively few deductions. The vast majority of business owners have no taxes withheld from their earnings and can take advantage of a huge array of tax deductions unavailable to employees.

To take advantage of the benefits tax deductions offer, you’ll have to figure out which deductions you are entitled to take—and keep proper records documenting your expenses. 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.

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.

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