Home Based Business Tax Deduction
Home based business tax deductions are closely monitored by the Internal Revenue Services.It is difficult to claim the deduction under this head, as the laws are being changed from the year 2007, to make it stringent.For approving these deductions, an auditor is commanded to visit the place and confirm the status before granting the concerned, any of the benefits under this clause.The special form 8829 is designed for helping the individual to claim for the deduction.The concerned businessperson is supposed to submit photographs of the office equipments with the photo of the desk, for proving the place as a home based business.
Requirement For Being Eligible For The Home Based Business Tax Deduction:
The most important requirement for this deduction is that the individual must use the specific space of the home exclusively for the business.It can be a separate room in the house or a section, which is divided in the room for carrying out the business activities.
The separate section r the room should not be invaded by the toys or personal belongings. It can not be the study room for the family members for using the computer and the printers for heir personal use, even if the section is used for 16 hours a day for business purpose.The occasional disturbance can be tolerated for deducting the taxes.
The next requirement is that the place should be used regularly for the commercial activities.The room should be often used by the individual for carrying out his business.Anyway, the official definition of the regular use is not provided by the Internal Revenue Services.
If the individual is doing the part time business, which needs to be done for four to six days in a week, then it should qualify for the relief.And if the space is used daily for more than six hours a day, it must qualify for the above mentioned requirements.It does depend upon the auditor, to clarify the details after inspecting the home based office.
The other most important requirement is that it should be the place, where the individual meets his customers, for transacting the business.This test or requirement was easier to fulfill in the year 2006, but the conditions are made stringent from the year 2007.
The test of the 12shome business can be sanctioned, if the individual is not having any other place for transacting his business and also does not have any of the other offices in the region.
The tax payer is advised to measure the office space and the total area of the house.For example, if the space occupied by the business is 250 square feet and the total area of the house is 2,500 square feet, the individual is suppose to file the tax deduction for the 10 % of expenses incurred in the house.The individual can claim the expenses like mortgage payments, utilities, internet, phone, and other home-related expenses.The expenses can also be included for the day care facilities, storage, and depreciation, if the concerned is eligible by the Internal Revenue Services.