What are the tax benefits of a home business?

taxes with andy magnus

Millions of people have found ways to earn money with a “side hustle”:

  • Creating crafts and knickknacks
  • Multi-level marketing opportunities
  • Bookkeeping
  • Blogging or internet marketing
  • Podcasting or Podcast Production services

The tax benefits of a home business can save you hundreds of dollars – legally.

Andy Magnus shared some of this information on my show. Click here to listen -> [27:58]

Can I turn my hobby into a business?

Absolutely, says Andy Magnus.

You just need to prove you have an intent to make a profit. Then, many of the expenses created in conducting your business become deductible.

Be aware: The IRS could disallow the deductions if the business does not make a profit in a certain number of years.

What expenses are deductible in a home-based business?

The expenses have to be ordinary or necessary in conducting your trade or business. Then they can be deducted.

Do I have to work out of my house to get tax benefits from a home-based business?

Many deductible expenses are created when you are doing business away from your physical home. However, things inside your house that can be used for business purposes can be deducted

  • Telephone and data plan
  • Physical room in your house
  • Usage of your personal vehicle

IMPORTANT TIP: KEEP RECORDS

Almost anything can be deducted, but the IRS may want proof that the money spent was created to conduct business.

Records can be in paper-receipt form, electronic form (like email invoices), or hand-written form.

Keep track of deductible mileage

One of the most ambiguous business expenses are mileage:

Miles to/from

  • Making sales or deliveries
  • Business meetings
  • Conferences or Expos

Keep a log of your vehicle’s mileage. Make note of the date, time, beginning and ending mileage, and business purpose.

Apps can automate or simplify tracking mileage:

How do I deduct business expenses from my hobby business?

In general, most people can use IRS Form Schedule C.

Click here to see the Federal Form Schedule C


Andy Magnus Tax Expert

You can contact Andy Magnus at http://proactivetaxpros.com/

Website   www.ProActiveTaxPros.com

Phone number:  314-720-1648

Disclaimer: This information is general in nature and may not apply to your specific situation.  Because the tax law is written in words, there may be more than one interpretation of any given set of facts.  Contact a qualified tax professional before taking any action. 

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