Tax Treatments
So, what kinds of tax treatments am I talking about?
For example, in my situation, my home office gave me lots of deductions based on square footage equaling 11.4% of my home's total area. I was able to deduct 11.4% of my:
- House payment
- Utilities
- Insurance
- Maintenance
- Yard work
- Security system
- Cleaning equipment and supplies
In addition, I was able to deduct the business portion of my:
- Cell phone
- Internet
- Groceries
- Meals eaten away from home
- Other qualified expenses
Finally, I deducted the full value of:
- Computer-related supplies (printer ink, paper, upgrades, etc)
- Office supplies
- Hosting and domain costs
- WA monthly fees
- Other business-only expenses
It all adds up and could save you plenty by reducing your taxable income, just as it does for us. In addition, my wife works full time from home, albeit for a company. She is a Medical Coder/Transcriptionist, and her situation gave us some additional deductions for her computer equipment and work space.
Note: We also had a few car-related deductions.
As I mentioned earlier, internet marketing is a business. Although some people treat it like a hobby it is, in fact, a business.
Next Up: Some Might Be Wondering:
Reply
"The general rule is that if you have not turned a profit in at least three of the prior five years, the IRS will categorize your business as a hobby. This may be extended to a profit in two of the prior seven years in the specific case of horse training, breeding or racing."
Also, how long ago was that? You are able to file an amended return for up to three years after the due date of the original return (File IRS Form 1040X).
Finally, your WA business has nothing to do with those other businesses. You are legitimately operating an internet business to make a profit. Thus, you can, and should, treat it as such. If your CPAs are telling you that you cannot claim expenses for your WA business, I'd look for another CPA.
Anyway, wish you continued success,
Joshua
