by Ann Albanese

Created on: May 31, 2008

Home Based Business Opportunity Tax Advantages
Starting a home-based business opportunity will allow you a lot of tax advantages. Your experience as a taxpayer will change dramatically. Fundamentally the tax system of the United States recognizes that the business of Americans is business and more and more people are pursuing home-based business opportunities that allow them some tax advantages. You need to be aware of them in order to take the business deductions that are available and in turn, increase your income. This of course will help you offset lost fringe benefits such as health insurance, pension plan, sick leave, and vacations. These alone are worth between 25% to 50% of employee wages.

In general, the deductions you can claim for you're your home-based business opportunity will fall into one of two categories: home-office expenses and ordinary business expenses. You can claim ordinary business expenses whether your office is in a downtown building or in your home. The primary tax advantage for the home-based worker is the home-office deductions. As long as you meet the necessary criteria, whether you live and work in a house, an apartment, a cooperative, a mobile home, or even a boat, you can deduct the cost of operating and maintaining the part of your home that you use for business.

The Internal Revenue Service has two basic criteria that your home office must meet in order to qualify for a tax write-off. The first is that the portion of your home you wish to claim as a business expense must be used exclusively and regularly for business. Exclusive use means that the portion of your home you're claiming as a deduction is used only for business. It can be an entire room, an alcove in your living room or a breakfast nook - that is not used for dining. It just needs to be identifiable for tax purposes. You calculate your deduction on the basis of the percentages of both space and time used for business. Regular use, is just what it implies, you use the space regularly to conduct your business.

Possible Home Office Expenses Tax Deductions
Generally, the following expenses can be taken as tax deductions for a home-based business opportunity: Cleaning a home office; condominium association fees; household furniture and equipment that is converted to use in the home office; household supplies used in the business space; partial mortgage interest; partial rents; partial real estate taxes; repair and maintenance of the office portion of your home; security system; certain telephone expenses; trash collection and utilities that are attributable to business use of the home (i.e. electricity, gas). The Internal Revenue Service advises that the portion of your home you use exclusively and regularly for business must be either your principle place of business or a place where you meet with customers or clients in the normal course of business.

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