Millions of people—including many who recently lost their job and can’t get another—operate a home-based business, part time, full time, or just some of the time. And, assuming they declare their income, they’re claiming a variety of tax deductions and/or tax credits when filing their tax returns.
If you’re not in this group, perhaps you should be, because (for example) Uncle Sam might pay for some or all of a new computer, a new car or truck, or even an overseas trip—if those are legitimate business expenses and you can prove it.
Most of these tax deductions and credits are listed and explained in IRS Publication 334: Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ). They include the following:
• Car and/or truck expenses: the standard mileage rate was 50.5¢ per mile from 1/1/08 through 6/30/08, and 58.5¢ per mile for the rest of 2008.
• Business use of your home. If, for example, you used 10% (or whatever) of your home’s square footage solely for business, you may be able to deduct 10% (or whatever) of your rent/mortgage and utility expenses (except for the first phone line).
• Insurance expenses: Under certain conditions, you could deduct some or all of the premiums paid for the following types of insurance: fire, theft, hospital, medical, dental, workers’ comp, long-term care, and/or life—for you and/or family members.
Keep in mind, though, that the IRS frowns upon those who set up a home business only for the purpose of claiming deductions, or who try to claim hobby or other personal expenses as business expenses.
