Home » Aron Govil: How Can I Save On Taxes By Claiming Home Office Deductions?

Aron Govil: How Can I Save On Taxes By Claiming Home Office Deductions?

When you are running a business from home, additional deductions may be available to you not just for the depreciation of your home office equipment, but also for expenses related to utility bills. Yes, even if your residence is part of your business says Aron Govil. Some typical examples include phone and fax charges; subscriptions to magazines; newsletters, books, and professional journals; advertising; supplies; postage; etc. This article will provide an overview of what you can deduct from your taxes as well as some tips on how best to organize all these records for maximum efficiency.

What Expenses Can I Deduct?

There’s no one answer that covers every person. If you’re trying to determine whether or not something qualifies, seek out advice from legal or tax professionals.

There are certain types of expenses which you can typically deduct such as:

  • Depreciation on office furniture and equipment. This includes everything from desk chairs, computers, printers or fax machines to filing cabinets and phones. Just is sure that if you’re using something for both work and home it is only deducted once; in other words, don’t claim a depreciation deduction twice.
  • Office supplies including paperclips and notepads. What about pens and pencils? Yes! If they’re purchased for business related use they can be deducted when purchased (provided they aren’t reimbursed by your company).
  • Expenses connected with the telephone line such as local calls (be sure to keep phone bills or copies thereof); long-distance charges; and installation, repair or maintenance costs.
  • Internet service charges if you use the internet for business purposes (research, invoicing, ordering supplies etc.).
  • Cleaning and other household expenses that are increased because of your home office. For example, if you have a separate room which is used solely as an office, then you can claim a percentage of your total rent or mortgage payments, utilities and even insurance costs. But what if you don’t have a separate room? In this case you would claim a proportionate amount of your overall home expenses says Aron Govil.
  • Travel expenses incurre while travelling to a client’s location or other work-related activity can be deduct provided they meet certain criteria (see below).

Do I Need To Keep All These Records?

You betcha! In order to make claiming home office deductions as easy as possible come tax time, it’s important to keep track of all your expenses. This includes not just the obvious things like receipts and invoices, but also pen and paper notes you may have taken about a particular phone call or meeting. The Canada Revenue Agency (CRA) recommends that you keep records for at least six years.

If you’re using online accounting software such as QuickBooks, Wave or Fresh Books, you can easily create reports which will summarize your business-related expenses incurred during the year. This is a great way to have everything ready come tax time.

  • If you are a self-employed individual or run your own business, you may be able to claim a home office deduction on your taxes. This can help reduce your taxable income and save you money on your taxes.
  • To qualify for the home office deduction, you must use a specific area of your home exclusively and regularly for business purposes. The space doesn’t have to be large, but it must be used solely for work. For example, if you use a corner of your living room as an office, you can claim a home office deduction.
  • There are a few things to keep in mind when claiming the home office deduction. First, you cannot deduct the cost of commuting to from your home office. Additionally, you cannot claim the home office deduction if you use your home for personal purposes as well.
  • There are two methods you can use to calculate the home office deduction: the actual expense method or the simplified method. The actual expense method allows you to deduct a percentage of your expenses related to your home office, including mortgage interest, property taxes, insurance, utilities, and repairs. The simplified method allows you to deduct a flat rate of $5 per square foot of your home office space says Aron Govil.
  • The best way to determine which method is right for you is to calculate both deductions and see which one results in a larger deduction. You can then claim whichever deduction gives you the biggest tax break.
  • Claiming the home office deduction can help reduce your taxable income and save you money on your taxes. Be sure to check with your tax advisor to see if you qualify for this deduction.

Conclusion:

There are a few things to keep in mind when claiming the home office deduction, including the fact that you cannot deduct the cost of commuting to from your home office, and that you cannot claim the deduction if you use your home for personal purposes as well says Aron Govil. There are two methods you can use to calculate the home office deduction: the actual expense method or the simplified method. The best way to determine which method is right for you is to calculate both deductions and see which one results in a larger deduction. You can then claim whichever deduction gives you the biggest tax break.