On self employment, can I deduct electricity cost to run my in home business using computers?
August 20, 2009 by workathomebizreviews
Filed under Home Business FAQ
vin91 asked:
There are also expenses for heating while I’m working, lighting, etc, that fall under electrical usage. Afterall these utilities aren’t free and are required to run my in-home small business.
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There are also expenses for heating while I’m working, lighting, etc, that fall under electrical usage. Afterall these utilities aren’t free and are required to run my in-home small business.
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Im sure u can, ask HR BLOCK
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Only a percentage…Divide the number of rooms and take a percentage of the bill for the room you work in.
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You should look up the IRS’s document on home offices. But the rule is you can deduct expenses related to a home office for the % of time it is used for business. Here is what the IRS says:
Home Office Deduction
IRS TAX TIP 2006-53
If you use a portion of your home for business purposes, you may be able to take a home office deduction whether you are self-employed or an employee. Expenses that you may be able to deduct for business use of the home may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting and repairs.
You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively:
As your principal place of business for any trade or business
As a place to meet or deal with your patients, clients or customers in the normal course of your trade or business
Generally, the amount you can deduct depends on the percentage of your home that you used for business. Your deduction will be limited if your gross income from your business is less than your total business expenses.
If you use a separate structure not attached to your home for an exclusive and regular part of your business, you can deduct expenses related to it.
If you are self-employed, use Form 8829 to figure your home office deduction and report those deductions on line 30 of Schedule C, Form 1040. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.
If you are an employee, you have additional requirements to meet. The regular and exclusive business use must be for the convenience of your employer.
For more information see IRS Publication 587, Business Use of Your Home, available at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).
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vin91,
nope. should you do this the computer will flag you and expect a visit.
if you are doing heavy usage get a separate circuit and meter and do turn a real profit over 10000$ you might try it.
one mistake is a homebusiness write off .
do document every thing if you choose to go this route.
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You can write off a percentage of almost everything. Electric, gas, water, even a Gardener and the mortgage. Get with a CPA or tax professional for more info.
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The bottom line is that the area you claim for must be set aside for business. If it is somewhere you work from time to time, the claim for a deduction will be denied.
Provided you meet the conditions, you need not necessarily go to the expense of getting a whole new meter as one person suggested (if I understood correctly).
I strongly agree with the previous poster who suggests speaking with a CPA or Enrolled Agent. There might be a lot more you haven’t thought of.
home business
Read Shogun’s answer- you can deduct home utitilities to the extent that you use your home for your business. You must have a dedicated area which you use ONLY for the business- even if it is only a closet or a half a spare room. Your computers should be used only for the business as well. If your business is run entirely out of your home (ie, you don’t have an office elsewhere) then you should be safe. It is true that home offices are a high audit area for the IRS, but if you are taking a legal tax deduction you shouldn’t worry about an audit- you will be fine. And for the record- for everyone- NEVER, but NEVER, use H&R block.
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