Home Business Tax Red Flag Write-Offs
Entrepreneur.com
“From guard dogs to Las Vegas-style showgirl costumes, there’s no limit to what people will try to write off at tax time for the sake of their business. But where do you draw the line? Which write-offs you’re trying to write off go too far?
We assembled a team of three leading tax attorneys to get their advice on how far is too far in the land of tax write-offs. Our team of experts include Cliff Ennico, a Connecticut-based business attorney who specializes in advising small businesses and entrepreneurs; Donna LeValley, a tax attorney and contributing editor to the J.K. Lasser annual tax guide; and Alvin S. Brown, a tax attorney who formerly worked with the office of the chief counsel of the IRS for more than 25 years.
Tax Write-Off: Home Office
Home office deductions used to be a big red flag for an audit back in the 1990s. These days, you just need to use the deduction with caution. A basic rule of thumb to follow? “Anything that’s unusual and disproportionate to your level of income is something the IRS will check out,” Alvin Brown says.
So how do you determine your actual home office space? This is the area in your home dedicated solely to the running of your business. Once you figure out the percentage of your home office compared to your overall home, then you can go back to your heating bills, electric bills and all other bills that go to supporting your home, and figure out the amount you can deduct for running your business.”
Read the Rest from Entrepreneur.com
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