Do you remember life before Covid? Even before the pandemic hit, you might have been lucky enough to work from home almost all the time. You could also take advantage of the option to work remotely – even if you were not in your house. Since the coronavirus upended our old way of life, running a business out of your home has taken on a different meaning. In this context, we would like to explain how potential tax deductions could apply to you!
Really Quick Questions About How You Qualify
First things first, there are going to be some confusing questions regarding your eligibility. When you operate your small business from where you live, you can get tax breaks. Still, you must meet certain requirements in order to receive this benefit. For example, do you have an area of your home dedicated to what you do for work? Does it also count as your headquarters? Do you typically meet with clients and customers here instead of in a commercial office space? Are any product samples stored here until needed? What about management or administrative matters? Do you handle them at home? If so, you probably qualify for some sweetheart deductions!
How Much is the Deduction Worth?
Okay, so let’s discuss how much the deduction can help you. You’ll have to determine your total expenses incurred. Then, find the business percentage related to various financial responsibilities that come with owning a home: rent, mortgages, property taxes, utilities, and general upkeep. Your home office will also make a difference based on the taxes you pay, the income you earn, and the type of business you have.
What Other Calculations Do I Have to Do?
Math is an important part of life. Even if you hated it when you were in school, that doesn’t diminish its value, so to speak, in your adult life. The traditional method of finding out what your deductions are linked to multiple variables. These factors include the total square footage committed to your office. Then, subtract the costs associated with mortgage interest and property taxes. Rent payments also apply here; don’t forget about the utility bills! Homeowners’ insurance and the depreciation on your home also affect your balance sheets.
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We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.