Work From Home Tax Deductions

*As a LifeLock Ambassador I received a membership & compensation for this post on work from home tax deductions*

This is my third year being self-employed with my blog work and social media management. Taxes can certainly get tricky when you’re self-employed, especially when you’re new to the process. What can you claim? What deductions can you take or, maybe even more importantly, what deductions shouldn’t you take? I’m NO expert, so my first recommendation is to consult a professional on work from home tax deductions!

First of all, when you work from home you can deduct your home office. There are some IRS guidelines to qualify as a home office–basically it has to be your principal place of business. Bloggers definitely count. You figure out the size of your office (it can be a whole dedicated room or just a corner of a room–but the space can ONLY be used for your work… not also the TV watching space, for example) and take it as a percentage of your entire home.

So what can you deduct for your home office? Use the size percentage of your office and apply to your bills for:

• utilities (including internet)
• home repairs (home improvements have to be depreciated)
• home owners insurance premiums
• mortgage interest
• property taxes

Business Expenses: there are also work from home tax deductions you can take for your business expenses. This can include MANY items, here are some common ones:

• Electronics: your work computer (used ONLY for work), printer, scanner, copier, tablet, your phone, etc.
• Business-related subscriptions: do you pay for monthly or annual memberships to forums or online communities for your work? Those count!
• Supplies: anything goes, but the catch is that the items have to be used SOLELY for your business. If you grab a pen, or tape, or paper from your office to make your grocery list or for the kids to scribble on… anything besides your work… you can’t deduct it.
• Business trips: gas mileage, airfare, hotel stays, food – if on a business ONLY trip.
• Childcare: if you paid a sitter or daycare to watch your children WHILE working (not while shopping or watching a movie!), you can deduct the payment.

Remember that expenses claimed can’t exceed the income for your work from home business. As I said above, make sure you talk to an expert in the field regarding do’s and don’ts and what to do when your business has lost money vs when you have made money. If you have a lot of expenses, but not much income from your business, you may be viewed by the IRS as a “hobbyist” rather than someone that can claim work from home tax deductions. Rules, rules, rules! The good news is that the IRS is making changes in 2013 for easier claims for work from home businesses… so hopefully when we file 2013 taxes in 2014, we’ll all have an easier time and taxes will be fun! <— said no one, ever 😉

Personally, we tend to play it super safe. We don’t claim a lot of deductions that we probably could… we never claim any supplies, subscriptions (but I don’t have any really expensive ones), or electronics… but we do figure out a percentage of space for my home office and we used to pay a sitter to come over once a week while I worked.

Have you done your taxes yet? We filed a few weeks ago. We ended up with a small return from federal and owing a small bit to state… not bad. This month LifeLock has been focusing on taxes and providing great tips and information to keep you safe and to help protect you from identity theft. Tax time can be a heyday for thieves if you aren’t careful. If you haven’t entered yet, head over to the LifeLock for Life Sweepstakes on LifeLock’s facebook page for your chance to win an annual membership or a $1000 VISA! You can enter every week to up your chances of winning!

~disclosure: as a LifeLock Ambassador, I received a membership and compensation for this post.