Tax Disclaimer -I am not a tax professional and you should consult a professional regarding any of the potential deductions listed below. The following items listed were found during online research and may or may not contain errors.
There is nothing more annoying than realizing that you had a tax break that could have saved you from a bigger tax bill. There are legal but strange ways in which you can lower your liability to the IRS. Most times when you hear about strange tax breaks the first thing that comes to mind is, it most probably isn’t legal. However much this may be true, there also are some tax breaks that are totally within legal bounds that you might not know about.
If every time tax season comes it sends you in a tail-spin then you might be crediting a lot more to the IRS than you are legally supposed to. Here are 8 tax write-offs for home business owners that you need to know lie under the legal frame of the tax system.
Next time you sit at the table and come up with your tax bill be sure to include these whenever possible.
Landscaping and Lawn Care
You may be allowed to deduct expenses you incur for maintaining your lawn if they add value in the kind of home business you are running. If you are a sole proprietor and you have regular meetings with clients in your home then that could be a reason. Of course you will be needed to show how the landscaping is necessary.
Moving Expenses...for your Pet
When your reason for moving is job related then this is a tax cut that is available to you. As such, you can include it into the costs of relocating. The costs moving take out from your adjustable gross income (AGI) and will be accepted as legitimate whether you choose to itemize them or not. Pet moving expenses may not be much if you are moving for a short distance and all you have is a cat. However, if you are moving across a long distance and you have to ship the animal the cost will rise substantially. In one scenario the animal to be relocated may be a horse; this is the kind of tax break that will save you from taxation for such expenses.
There are some treatments for addiction that fall under medical and dental expenses that may be deducted. An example of such a treatment is one for people who are trying to stop smoking. Smoking cessation programs may be included but nicotine patches or gum do not apply. If you have been diagnosed with a disease such as high blood pressure or obesity then you may add a weight loss program. Another expense that may be written off is the cost for inpatient treatment for drugs and alcohol addiction. Expenses incurred for addiction treatment can be deducted above the threshold value of 10% of your adjusted gross income.
If you use guard animals to protect your property then you are entitled to a deduction for some of the animal(s) expenses. It doesn’t necessarily have to be the conventional scenario in this case. There is a case where the tax court allowed cat food to be written off since the cat kept snakes and rats away from a junkyard used by a home business.
Student Loan Interest
When the time comes to pay student loans it stresses a lot of people out. Well, the interest on such loans can be written off. The tax code in the US allows for certain activities and purchases that add value to the society. You can deduct up to $2,500 from your student loan interest every year. However, the IRS will not let you off the hook so easy. There are circumstances when the deduction may not be valid. If you are listed as a dependant on another person’s tax return then you cannot include the deduction. Also, if your adjusted gross income is greater than $75,000 in the case of a single filer or $155,000 if you are a married couple then you cannot add the deduction.
Your Big Home Office
There are expenses that you incur around the house that may fall into the list of expenses you would typically incur if you have a home office. However, this tax deduction should be considered carefully because the IRS has strict rules regarding what is deductible and what isn’t. Expenses such as painting repairs, insurance, depreciation, utilities, mortgage interest and real estate taxes may be deducted. As afore mentioned, the IRS is a stickler when it comes to tax breaks on home office expenses. The stipulation is that the home office must be a part of the home that is strictly designed for business. The ideal scenario involves a detached office. In cases where the office is attached to the house, then it needs to be specifically designed for business. Another thing to keep in mind is that the IRS will want some written evidence to support the deduction.
You may have a love for organically grown vegetables and have planted your own in your back yard. Sometimes the produce is enough to use at home and still sell in the farmers’ market. For such an endeavor you will realize that the auxiliary costs are becoming too expensive. Turning your love for small time gardening into a business just requires you to report you business income no legal hurdles to deal with. However, if you keep declaring loses year in year out then it might seem more like a tax shelter than a legitimate deduction.
Your Tax Evaluation & Preparation
You get a write off from preparing your tax deductions. Now that seems like something to smile about when you think about the long night you have on April 15. You can itemize things such as accountant fees and costs for how-to books and any software you may have used to prepare your tax returns. That being said the deduction is only applicable if the cost is above 2% of your adjusted gross income. Politicians question it when large corporations take advantage of the loopholes in the tax system. Well if you thought that the tax system did not have loopholes for the average citizen, think again because there are a few that you can take advantage of.
If you have any creative tax deductions that you’ve used in your home business, please share in the comments! 🙂