Don’t you just love tax season? Haha, yes, that is sarcasm. 😉 It can be such a hassle! One of the biggest struggles for bloggers is knowing what work at home tax deductions are available. It can be challenging to know what’s deductible and what’s not. And always, there’s that fear of screwing it up and having the IRS coming down on you!
But still – you want to keep any money that’s rightfully yours to keep, right?
That’s why it’s important to know what kind of deductions you can legally take advantage of. Some things can be completely written off, others take a bit of calculating, and you need to know just how to do it.
Now, keep in mind, I’m not a tax expert or accountant, just a blogger who’s been working from home for many years. And here’s what I’ve learned about maximizing your deductions legally:
Know the Difference between a personal expense and a business expense
Even if you’re working from your home, you can’t deduct your personal expenses. That said, some of your expenses are used for both personal AND business – like say, your internet connection and your cell phone. In that case, you can deduct the percentage used as business expense. Click here to check out the IRS guidelines.
Know the difference between a capital expense and a business expense
A business expense is an expense that you incur maintaining your business – things like travel costs, rent, or insurance. (Check out IRS Publication 334 here) Capital expenses are the cost of purchasing assets for your business – things like the computer or a delivery van. Capital expenses aren’t deductible business expenses – BUT! – you can amortize them or deduct their depreciation over time. Once again, the IRS offers guidelines on how to depreciate certain items.
Deduct your home office
Since you work from a home office, you can very likely deduct expenses for the business use of your home. That could include mortgage, insurance, utilities and so on, based on a percentage determined by calculating how much of your home expenses are used towards maintaining your business. See this page from the IRS for more info on deducting your home office area.
This is an important work at home tax deduction, but there is a caveat here – you MUST use your home office both regularly AND exclusively. That means if your kids use it to play video games at night or do their homework, you aren’t allowed to deduct it. It’s also got to be your principal place of business.
Travel, Meals, and Entertainment
Any business-related travel expenses can also be work at home tax deductions – and so can business lunches or other meals. If you take a client out for lunch, deduct it! If you send a client a bouquet of flowers or a gift basket, deduct it! Even if you take your family on a vacation and conduct business while you’re there, you can deduct a percentage of the trip.
Employees and Contractors
Do you pay a VA or for someone to write posts or create images for you? Deduct those costs!
This is a good one if you’ve funded your business with credit or a loan. You can deduct the interest charge to you. (Hint – This is why it’s so important to keep your business and personal finances separate!)
One of the work at home tax deductions that many people forget about is their retirement account. You can use it as a deduction, depending on the amount you invest and how you invest it.
You can deduct the cost of insurance for your business.
These expenses can be deducted. For example, seminars, classes, educational materials and conventions.
Web Hosting and more…
If you are making income from your blog, any costs related to creating or running it are tax deductible. So if you purchased a theme, pay for hosting or email service, or even purchase a plug-in – don’t forget to take those deductions!
It’s important to stay on top of what you can and can not deduct from your taxes. While maximizing your deductions is the goal, you also want to make sure you’re following the rules. If you have any questions, check out the IRS website for info on self-employed individuals, or consult with a certified tax accountant.
PS: Nervous about doing it on your own? TurboTax products have continuously ranked as the #1 best-selling tax software helping Americans keep more of their hard-earned money. Check it out on Amazon!