Tax Benefits of a Home-Based Business

People who run a small or home-based business now qualify for a greater array of tax advantages than any other category of taxpayer!

Even the super-rich with their high-priced tax lawyers can't get the tax breaks that YOU can, simply by operating a simple side-business that may take you no more than minutes a day to run.

Congress wants to encourage taxpaying Americans just like YOU to have a home-based business because it is good for the overall U.S. economy. So, they passed legislation that allows you HUGE tax breaks if you do. They'll even let you take tax deductions on losses from your home-based business.


Why???

Because Congress is betting that some of you will hit on a winner, strike it rich, and, thus, pay a LOT in taxes. Of course you won't mind paying a lot in taxes if you're making a boatload of profits, right?

You May Qualify for Refunds and Deductions IF....

Lots! Think of your home as a "place of business." Does a traditional business write-off its Gas, Electric, Water and Sewer bills as "costs of doing business?" Yes, of course, and so you can write-off a portion of your utility bills, too.

How about a business's Rent or Mortgage? Yes again. So, if your "place of business" is your home, you too can claim a tax deduction for a portion of the rent or mortgage on your home. (Finally, renters get a tax break!)

Your Car can be worth huge tax deductions if you use the IRS "Two Business Location Rule" to connect your small or home-based business with your "day job." This rule actually turns non-deductible "commuting" miles into fully deductible business miles. If you are not using this rule to your advantage, it's like throwing a 10.00 bill out your window every time you drive 30 miles.

For most taxpayers, vehicle mileage deduction alone is worth some 3,000 to 5,000 or more in new tax deductions, thanks to the "Two Business Location Rule."

This list goes on and on…

Do you have kids who you give "spending money" or an "allowance" to? Do you require them to do chores around the house to earn that money? If you "employ" your kids to do part-time work in your home-business, the money that used to be an "Allowance," now is "Payroll." That means the money you pay them is tax-deductible to you, and the income they receive is tax-free to them.

Do you lose thousands of dollars worth of medical deductions each year because you fail to meet the minimum percentage required to claim the expenses? There is a way you can claim every single dollar that anyone in your family spends on medical insurance deductibles and co-pays, plus many non-covered health-related expenses such as eyeglasses, dental exams, chiropractic services, holistic healing and sometimes even cosmetic surgery. How? Your small or home-based business simply hires your spouse for part time work, and then gives the spouse -- as an "Employee Benefit" -- reimbursement for these categories of health costs for the spouse and his/her family. The "family" includes you and your kids, so all of you are covered under this tax-deductible Employee Benefit.

Do you have a dog that barks when someone approaches your home? You may have a tax-deductible "burglar alarm," allowing you to deduct your dog's vet bills, license fees, even dog food.

How about your cat? Does it chase or kill mice? Maybe you have a "rodent control system." No kidding, Tax Courts have ruled that this deduction is completely legal if you have a legitimate home-based business

That's just the 'Tip of the Iceberg'!

There are dozens of others also. The rule of thumb is, "If a traditional business can deduct it, your home-business probably can also."

Source: It's How Much You Keep That Counts, Not How Much You Make, by Ronald R. Mueller MBA and Scott C. Turner, CPA