Tax Tips (Part 3)

There are expenses related to having an office in your home that are also deductible, including a percentage of your utilities, maintenance and upkeep, and even depreciation. You must have a designated room as an office that is not used for anything else to take these deductions. You measure the size of the room and see what percentage of your entire house it is to determine what percentage of utilities you can deduct.

Deducting a portion of your home as depreciation can be tricky. A word of warning: Watch the laws concerning the sale of your home. Deducting an office can affect your capital gains. When you sell your home, any depreciation taken in prior years has to be claimed as income and can impact the tax line.

The deductions do add up. Personally, I have written off six computers, two college degrees, and an assortment of other expenses. The computers have all been used for my business, not for family computer games. Both of my degrees (a BA in Religious Studies and an MA in Communications) were considered job-related. When I go on vacation, I often incorporate business into my trip, so that I can write off part of the vacation. However, I only write off the percentage that directly relates to my freelance writing.

More tips will be given in next week’s blog.