Home Business: Standard Tax Deductions
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Home Business: Standard Tax Deductions

Besides the deductions your home office affords you, you can take a number of standard business deductions available to business owners in general, whether they work from home or rent office space. When claiming a deduction, make sure you have the necessary supporting documents such as canceled checks, sales receipts, and credit card slips and statements.
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Besides the deductions your home office affords you, you can take a number of standard business deductions available to business owners in general, whether they work from home or rent office space. When claiming a deduction, make sure you have the necessary supporting documents such as canceled checks, sales receipts, and credit card slips and statements. These deductions include a variety of business-related expenses: supplies, equipment, furniture, professional services (including attorneys and accountants), payroll, uniforms, postage and shipping, advertising, insurance, and any trade publications.

Vehicle Expenses

Business mileage is tax-deductible. Business miles accumulate when you drive for the purpose of either doing business or seeking business; going to talk to a potential client, visiting a supplier, and doing something related to the promotional aspects of your business are all considered business mileage. The mileage you drive from your home office to any other location for business purposes is deductible. As with your other deductions, you must be able to support your claims for business miles. Keep a log by entering your business mileage after each trip. Enter your total daily business mileage on your appointment calendar at the end of each day.

Travel and Entertainment

If you don't want potential customers visiting your home office, you'll be meeting them in another environment: their home, their office, or a neutral area such as a restaurant or bar. As a home-based business owner, you may find that you conduct much of your business over lunch or dinner in restaurants.

If you entertain clients or potential clients to discuss a current or future project, you can deduct a portion - 80% - of your entertainment costs. To qualify for this deduction, you must maintain a log of entertainment-related expenses you plan to deduct.

Use a standard appointment calendar to record whom you were entertaining, where you were, and how much you spent. You must be specific in describing the nature of the discussion; the IRS will not accept general "goodwill" as a reason. In certain instances, you can even claim business-related entertainment that takes place in your home; ask the attending clients or prospects to sign a guest log. If you prepare a meal or serve drinks, your expenses are deductible as part of the expense of doing business.

You may have to travel to other cities or states for several days at a time on business. For instance, an importer who buys jewelry from Thailand may have to travel to Thailand several times a year to seek out and purchase new inventory. Or, you may be trying to land a client in Colorado for your public relations business, but you live in California. If the client won't do business with you unless you do a face-to-face presentation, you'll need to make a trip to Colorado.

Business travel deductions range from the cost of air, bus, or auto fares to hotels and meals, and to incidental expenditures such as dry cleaning, tips, and taxis. However the rule is that you must stay overnight on business to claim travel/incidentals deductions.

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