Last Minute Home Business Tax Deductions for 2012
Published: 04/15/2012 by Kevin Mulligan
Still looking for that last little deduction to shave a few bucks off of your tax return before you send it in? Or maybe you have already submitted your taxes but realized you may have left additional tax refund money on the table by not claiming enough home business tax deductions.
Running your business out of your home or dedicating part of your home as an office space for a small business can give you many new opportunities to deduct money from your taxes. Here are some of the key tax deductions to get this year:
Tax Deductions for Business Use of Your Home
Here are six major small business deductions you can claim for running your business out of your home.
Percentage of rent, mortgage, and utilities
One of the biggest deductions you can get is a percentage of your rent or mortgage as well as any utilities used for your home. You have to be careful not to overestimate with this deduction in case you get audited, but it is a legitimate deduction. The IRS will let you deduct whatever percentage of your home is used solely for business. To figure your percentage measure the total square footage of the area used for business and divide it by the total square footage of your home. Whatever that percentage is, the associated percentage of your home mortgage or rent plus utilities can be deducted.
For example, if you had 120 square feet of a 1,200 square foot home dedicated to business use, that's 10%. If your annual cost of mortgage and utilities was $18,000, you could write off $1,800 of that amount as a deduction.
Percentage of real estate taxes
Likewise your real estate taxes can be deducted in the same manner. If you pay $1,000 per year in real estate taxes and your home office is 10% of your home, you can deduct $100 of the taxes paid.
Internet and cell phone services
You should be able to deduct any required telecommunication services for your business. Almost every business requires the use of a cell phone and access to the internet. You will need to determine what percentage of the total use of those services is directly related to your business. If your family uses the internet often, you probably won't be able to deduct 100% of the cost but some of it should be deducted to your business.
Office equipment depreciation
Need to buy a new Macbook Pro to start your web design company out of your house? That equipment is tied to your business and is a business related expense, so you can deduct it. Again, you have to be careful that you don't just write off everything as a business expense – if the IRS thinks you don't use the item just for business use, the onus is on your to prove otherwise.
Maintenance and repair of a home office
Did you refurbish your office space with new paint and flooring? Does the air filter in the room need to be replaced? These maintenance items can be deducted.
Furniture and filing for your home office
As you might expect any desks or filing cabinets you buy for your business can be deducted as well.