Take A Home-Office Deduction

When you set up a home office, you can deduct a percentage of your expenses for rent, utilities, property taxes, maintenance, repair, cleaning and insurance.  If your home office is 15% of your total residential space, you can deduct 15% of all those expenses.  The main requirements are that you need a home office as a place to maintain your records, and that you can take deductions for home-office expenses only if your business is profitable.

	Take A Home-Office Deduction   Time to complete:   10 minutes Money you'll spend:   $0 What you'll get:   Around $420 per year, assuming you pay $10,000 per year for your home, 15% of it is home-office space, and you're taxed at 28%. Step-by-step instructions:  Look up the total square footage of your residence in your records.  All floors of your house must be counted. Decide which room to use as a home office.  You don't have to use an entire room, you can mark off just part of it as your home office.  Take out a tape measure and measure the dimensions of your home office.  Multiply the width and length to get the square footage.  As an example, if it's 10 feet wide by 15 feet long, that's 150 square feet. Divide this number by the square footage of your residence.  For example, if your home is 1000 square feet, and your office is 150 square feet, you'll be able to deduct (150/1000) = 15% of home office expenses. Label a folder "Home Office Deductions". Over the course of the year, place receipts for your household expenses in this folder. When you do the next year's tax return, total up these expenses.  Multiply these expenses by your home office percentage (example: $10000 expenses X 15% home-office space = a $1500 deduction.)  In the first year you have a home office, you can only deduct expenses that occurred after you established your home office.  For more ideas, read these BankRate.com tips on Home Office Expenses. Sponsored Links Further Reading: Tax Strategy: Start A Side Business, an article at The Dollar Stretcher explaining the ins and outs of this tax strategy. Tax Magazines to help you save on taxes, 90-day risk-free trials available. Working from Home : Everything You Need to Know About Living and Working Under the Same Roof, a top-rated book at Amazon.com that tells you everything you need to know about how to set up and manage a home office. J.K. Lasser's Tax Deductions for Your Small Business, a top-rated book now available at Amazon.com.  It shows small business owners exactly how to minimize their tax bite, while maintaining legal and accurate records.

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