Tax Deductible Expenses When You Work From Home
These days there are more and more workers who are deciding to go freelance, work for themselves and enjoy all the flexibility that self-employment brings. With the end of the traditional jobs for life culture in most countries and with the arrival of global online jobs it is becoming easier and easier to freelance from the comfort of your own home and to find contracts for new work at the click of a button.
However, if you do decide to work from home it is important to make sure you claim your full tax entitlement to all the deductibles that come with your new working style. The first thing you should obviously do is get yourself a good accountant who will be able to tell you which deductibles are specific to your industry. However there are certain key deductibles that all freelancers and home workers should be aware of. This article will outline the most common ones.
1. Deductions from your home – Whether you’re working in your home itself or a purpose built office at the end of the garden you can claim a percentage of the mortgage or lease. In order to do this you must calculate just how much of your home is actually used for business and then claim that percentage from your rental or mortgage payments. After that, make sure you maintain up to date records of any expense that goes towards the home office / business office maintenance. These expenses could be anything from the cost of building the office or maintaining it to the provision of utilities such as broadband, phone and electricity. In addition it is also possible to deduct the cost of equipment such as printers and computers, phones and stationery, although some of these may be classed as assets and then the depreciation deducted annually.
2. Deductions for travel – all travel expenses, no matter how minor, will be deductible, so long as they are incurred in the running of the business. Travel expenses are normally split into two groups, those journeys exclusively for business purposes and those that combine business and pleasure. The amount you are permitted to deduct depends on the journey. The best way to handle travel expenses is to keep a log book for your mileage and note down those journeys which were for business.
3. Business training – All professional training that you do as part of your business and career development is tax deductible, especially if it leads to some type of professional accreditation. If there are any training courses that you have always wanted to do and they relate to your business you might as well do them as part of your business and then deduct the tax.
4. Employing other people – As a freelancer or self-employed business owner you are entitled to deduct the cost of day-care, babysitters or nannies from your tax return. Just as importantly you may also claim a deduction for any professionals who you had to hire to keep your business functioning smoothly. This might include IT technicians, legal professionals or even your accountant.
5. New Tax Credits, tax regulations and tax solutions – as a self employed business owner it is imperative that you stay on top of all the advantages that you are able to use in the taxation regulations. Whereas you will not be able to benefit from regular employer / employee benefits such as medical insurance, pensions, payday loans, company cars or company credit cards you will be able to take advantage of specific tax credits, umbrella company structures and all kinds of other self-employed tax reliefs. Talk to your accountant regularly to keep on top of these issues.
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