I never aspired to own my own business. Before I became a stay at home mom, I always worked for other people, who took care of taxes for me. When I started this blog, and it began making money, suddenly I had to worry about more than taking the standard deduction. As a blogger and freelance writer, my taxes have become more complicated.
As online entrepreneurship grows, more and more people are needing to become savvy about what they can and cannot deduct when working from home. These are a few of the things I’ve learned along the way.
I personally do not deduct anything for a home office. Why? I generally write from my couch or my bed, and to deduct a home office, you need to exclusively use your home office for business. If you have a room or space in your house set aside for business, it’s a good deduction. But if you use your space for anything else, you can’t deduct it.
You can deduct a phone line, if it’s a separate business line. The same goes for a cell phone. If you don’t use a separate line for business, you can deduct the percentage of the line that you do use for business, but you have to keep really good records. The same goes for your internet connection. Deduct the percentage of the bill that you use for business, but make sure you have the records to back it up!
Theoretically, you could deduct business use from other utilities, too, but I don’t keep the records to back up that deduction, so I don’t do it.
If you use your car for business, you are allowed to deduct either a percentage of your actual car expense or mileage, but not both. I generally deduct mileage. Certain rules apply, though. Once again, you need to keep good records. Record your mileage at the beginning and end of every year. Record every trip you take for business, noting where you went, why you went there, and how far your traveled. And each mile you deduct needs to be for business purposes only. So if you decide to check your PO Box for business, but stop on the way home to pick up some groceries, you can’t deduct the mileage.
The three most confusing deductions for those who work from home are listed above. Don’t hesitate to deduct other common self-employment expenses though. There are many.
There are tons of deductions for those who work from home. Tax programs like TurboTax do a good job of walking you through all the possible deductions you can take. However, once your taxes begin to get really complicated, it’s a good idea to have an accountant look over your taxes. It never hurts to have someone knowledgeable make sure you’ve deducted everything you can, but not more.
Did I miss anything? If you work from home, do you do your own taxes or pay an accountant?
Photo by SeniorLiving.org.
If you like this article, please sign up for free weekly email updates.
I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
In accordance with FTC guidelines, I state that I have a financial relationship with companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.
Any references to third party products, rates, or websites are subject to change without notice. I do my best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.