Whether you are working in the US, where the highest tax bracket stands at 37 percent, or living in Italy, where tax can consume a whopping 43 percent of your income, it pays to know about your entitlements. Home business owners, in particular, stand to benefit from some of the available tax deductions. While you should certainly look at the specific regulations in your part of the world and seek the services of a qualified accountant, here are just some of the benefits you may be entitled to.
Office equipment is usually the most common tax deduction category for home-based business owners. This is because it goes without saying that to run a home business, you will probably require furniture and gadgets such as a computer and software programs and other devices such as smartphones and printers. In many cases, you can claim all this equipment as tax deductions.
If you use your phone and internet for business purposes, you may be able to claim the bills associated with their use as tax deductions. Other utility bills such as electricity for your home office may also be deductible.
If your home-based business requires you to travel to meet clients or attend meetings and events, you can generally claim those as tax deductions. As such, be sure to keep track of the miles that you travel in your car for business purposes and other records such as fuel and vehicle maintenance receipts.
Furthermore, if your business trips take you further afield, be sure to keep a record of your train and air expenses. It is also worthwhile to keep the receipts for your hotel accommodation and food purchases while on the road.
Home Office Space
If you happen to use a specific room in your house as a home office, you may be eligible to claim a certain percentage of your rent as a tax deduction, says the senior writer for the portal UTILEINCASA. “To get a better idea of what you may be entitled to, divide the square footage of your home office by the square footage of your entire home and multiply this figure by 100 — this will give you the area of your office as a percentage,” she explains.
Other Potential Tax Deductions
The list above by no means covers all that you may be entitled to when filing for tax deductions. Other areas to think about include home office supplies, home insurance, business association fees, cleaning services of your home office (and cleaning supplies), advertising and marketing, and mortgage insurance and interest.