June 22, 2018

Tax Relief

Rhea is an accomplished artist with two small children. She is very talented but is not happy with the idea of leaving her two small kids and going out to work as a graphic designer in the company where she used to work earlier. She may not admit but it gets very frustrating for her at times knowing that she has great potential but just can’t do anything about it. Flicking through a magazine she realizes that she can start her business right from her home.

One may not realize it but working from home is a very profitable option. You will get tax relief on rent you pay as well as if you accomplish the official requirement of doing business from home, you can get tax relief on home office tax.

But first let us confirm who qualifies for the Home Office Tax Deductions. ‘Who’ here may be the owner or an individual who has rented the place. If you are operating your business from this property you are entitled for tax relief in home office tax provision.

Good part is that the IRS is not too particular on the definition of home. It can be a trailer, apartment or a mansion, just a place where you cook your food and spend the night. There are some conditions to be met for qualifying for the home office deductions.

It is essential that you don’t try to mislead the IRS on your business office, if you are not operating from home. They are bound to discover it if your return is scrutinized. Remember to keep proof of all transactions you have with your client at home. Like getting a log book signed etc. The other thing is to keep your home and business account separately.