Product Description

Save more of your hard-earned money!

Completely updated for 2008

Tax deductions are essential to any business, but even more so when your office is also your home. Why spend thousands on an accountant, when you can turn to Home Business Tax Deductions and do it yourself!

Home Business Tax Deductions will help you write off:

Product Details

• Amazon Sales Rank: #94157 in Books
• Published on: 2007-12-12
• Original language: English
• Number of items: 1
• Binding: Paperback
• 476 pages

Review

"Full of exactly the sort of tips that business owners usually turn to their accountants for..." -- Accounting Today

"Whether you're going to start or have already started your business, you need this book." -- Paul Tulenko, syndicated business columnist

"Translates complicated tax-law jargon into words you can understand and apply to your home-based business without hiring a CPA...." -- Cleveland Plain Dealer

About the Author
Stephen Fishman is the author of many Nolo books, most recently Tax Deductions for Professionals. Other titles include Deduct It! Lower Your Small Business Taxes, Every Landlord's Tax Deduction Guide and Home Business Tax Deductions: Keep What You Earn plus many other legal and business books. He received his law degree from the University of Southern California in 1979. After time in government and private practice, he became a full-time legal writer in 1983.

Excerpt. © Reprinted by permission. All rights reserved.
Chapter 1
Introduction

Once you start your own business, you can begin taking advantage of the many tax deductions available only to business owners. The tax code is full of deductions for businesses -- and you are entitled to take them whether you work from home or from a fancy outside office. Before you can start using these deductions to hang on to more of your hard-earned money, however, you need a basic understanding of how businesses pay taxes and how tax deductions work. This chapter gives you all the information you need to get started. It covers:

how tax deductions work
how businesses are taxed
what expenses businesses can deduct, and
how to calculate the value of a tax deduction. A. How Tax Deductions Work

A tax deduction (also called a write-off) is an amount of money you are entitled to subtract from your gross income (all the money you make) to determine your taxable income (the amount on which you must pay tax). The more deductions you have, the lower your taxable income will be and the less tax you will have to pay.

Types of Tax Deductions

There are three basic types of tax deductions: personal deductions, investment deductions, and business deductions. This book covers only business deductions -- the large array of write-offs available to business owners, including those who work out of their homes.

Personal Deductions

For the most part, your personal, living, and family expenses are not tax deductible. For example, you can't deduct the food that you buy for yourself and your family. There are, however, special categories of personal expenses that may be deducted, subject to strict limitations. These include items such as home mortgage interest, state and local taxes, charitable contributions, medical expenses above a threshold amount, interest on education loans, and alimony. This book does not cover these personal deductions.

Investment Deductions

Many people try to make money by investing money. For example, they might invest in real estate or play the stock market. These people incur all kinds of expenses, such as fees paid to money managers or financial planners, legal and accounting fees, and interest on money borrowed to buy investment property. These and other investment expenses (also called expenses for the production of income) are tax deductible, subject to some important limitations. (See "Investing and Other Income-Producing Activities" in Chapter 2 for more on investment deductions.)

Business Deductions

Home business owners usually have to spend money on their businesses -- for example, for equipment, supplies, or business travel. Most business expenses are deductible sooner or later. It makes no difference for tax deduction purposes whether you run your business from home or from an outside office or workplace -- either way, you are entitled to deduct your legitimate business expenses. This book is about the many deductions available to people who are in business and who happen to work from home.

You Pay Taxes Only on Your Business Profits

The federal income tax law recognizes that you must spend money to make money. Virtually every home business, however small, incurs some expenses. Even someone with a low overhead business (such as a freelance writer) must buy paper, computer equipment, and office supplies. Some home businesses incur substantial expenses, even exceeding their income.

You are not legally required to pay tax on every dollar your business takes in (your "gross business income"). Instead, you owe tax only on the amount left over after your business's deductible expenses are subtracted from your gross income (this remaining amount is called your "net profit"). Although some tax deduction calculations can get a bit complicated, the basic math is simple: The more deductions you take, the lower your net profit will be, and the less tax you will have to pay.