Category Archives: tax deductions for home-based business owners

Hi Jolly Campground, Quartzsite AZ_Mar-31-2023

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March 31-Apri 6, 2023

This is one of my favorite no frills homestead stops, and one I escape to when I am tired of dealing with folks who feel they are entitled to more camping space than anyone else. Also, the host (Alex) is a wonderful, caring person. He is observant and makes sure people honor the 14-free day stay clause.

Hi Jolly is a free 14-day BLM dispersed (wide area) camping area location in Quartzsite, AZ on U.S. Highway 95. There aren’t any amenities (sewage dumps, electricity, or fresh water spickets). However, this property is conveniently located near service stations. A bank, fresh water and propane refills and dump stations. As well as, a grocery store, family dollar, dollar general, hardware store, fast food shops and indoor dinning eateries.  There are seven or more nearby campgrounds to name a few.  So, if you enjoy crowds, crowded living spaces, and busy people constantly roaming around. I certainly don’t like crowds and can only deal with these living environments occasionally.

Therefore, after watching the constant movement of people, hearing my neighbors conversations, and my dog Echo barking constantly, because our neighbor and their guests were sitting close to our motorhome to dodge the sun, rather than on their concrete patio slab under an umbrella. Further, slamming motorhome doors and closeness of one neighbor who decided to park his roofless ATV close to my motorhome to block blowing rain from get into his ATV.

At this point, I determined it was time to leave and visit with Alex and his wife at Hi Jolly, my peaceful place to mentally prepare myself for my return trip to Sioux Falls. It was a blast finding a few Canadian and European friends at Hi Jolly, planning their severe weather escape enroute home, the same as I. We left Hi Jolly in waves. Wishing each a safe journey home.

Home BusinessTax Deductions

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The month of January is when most home-based business owners begin to verify his/her monthly expense records (i.e. bank statements, credit card statements, customer receipt copies, receipts from store purchases, spreadsheets, etc.) to take advantage of appropriate deductions allowable for his/her business.

If you’ve operated a home-based business for a while, you’re already knowledgeable of the types of deductions you can legally claim, and this article only serves as a reminder of deductions you might have overlooked while filing your tax return last year.

On the other hand, if you are new to home-based business ownership. Then, this article might be useful in helping you take advantage of deductions you can claim this tax year. As well as, using links included in this article to identify other deductions you might be permitted to claim.

Exclusive Use Deduction

In order to take advantages of IRS tax deductions for a business operated from your home, the area used must be regularly and exclusively used to conduct business. For instance, if you use your entire basement solely to provide daycare service to clients on a daily bases, and not use it as a family den once the children are gone for the day. Your entire basement is tax deductible based on a formula used to compute the total area of your home which determines the percentage for your deduction.

The same exclusive use deductions are allowable when you use a room in your home, as a home office to run your business, or a room in your home to store business merchandise, performer costumes, props, etc. Read more about deductions.

Allowable Deductions for Business Use of Home

Based on percentage of exclusive home-business usage, a business owner can take advantage of indirect expenses such as mortgage interest, real estate taxes, insurance, utilities, home repairs, maintenance and depreciation which are listed under Qualifying for a Deduction.

Business Only Expenses

Business owners usually incur exclusive expenses from operating an office or other business ventures which may include but are not limited to the following:

  • Advertising (i.e. business cards, brochures, flyers, ads, website creation and hosting).
  • Communication (i.e. business telephone, cell phone, mobile devices and internet service for business). Legal and Professional (i.e. fees paid to talent agent, personal manager, accountant, legal advice, memberships).
  • Profession supplies (i.e. pens, pencils, notebooks, pads, copy paper, paints, brushes, sketchbooks, darkroom supplies, music stands, sheet music, clay, glaze, copier machine toner, fax/print cartridges).

Remember, expenses you decide to claim as deductions must be related costs and common to your type of business. The same holds true for business insurance, office equipment, equipment repair/maintenance, licenses, travel, meals, entertainment and other expenditures.

An afterthought: When it comes to filing tax returns, middle-income earning tax-payers with no dependents, but work two jobs to meet financial needs are often the loser when it comes to tax refunds. He/she receives little to no tax refund, or is required to pay additional taxes when filing tax returns because an employer didn’t withhold enough taxes during the year.

This is when, owning a home-based business and working it as your second job rather than working for someone else might be more profitable, provided you work in a profession that affords you the opportunity to work as an independent contractor.