Save Taxes With a Qualified Home Office
When you work from home it makes sense to have a space in your home dedicated to work. It makes even more sense when you realize how much you can save on your taxes by having a qualified home office.
I have heard many people, even other professional tax preparers say that the IRS requirements for a home office are too strict, that calculating the taxes is too complicated, (especially when you sell your home), and that claiming a home office is like waving a red flag in front of an auditor.
The truth is, the requirements are strict, but not difficult to follow. All tax forms are too complicated, and, if you claim your home office properly you don’t need to worry about being audited.
The tax savings can be substantial. Not only do you get to deduct a portion of your rent or mortgage interest, you also get a deduction for repairs and maintenance, utilities, and office furniture. A sole proprietor using just 10% of the home as a qualified home office can potentially have thousands of dollars worth of deductions saving hundreds in taxes each year. A home office also qualifies as a place of business and will make more of your auto miles business miles. As an example, $5,000 in home office expenses will save a sole proprietor at least $1,250 in taxes.
To be a qualified home office your office must be used regularly for your business. It must also be used exclusively for business. This is where most people trip up. You have to think of your home office the same as any business office. This means that any use that is not business use disqualifies the home office. So you can’t have guests sleep in your office, and the kids can’t use the computer to do homework. There are two exceptions to the exclusive rule. Space used as a daycare does not need to be exclusive, and the same is for true for the storage of inventory or product samples.
Home office deductions are not limited to the self-employed. If you work for someone else you may also be able to claim a home office deduction. The home office must be for the convenience of the employer, and your employer must not pay you rent for your home office.
For more information on home office visit the IRS website and refer to Tax Topic 509, Business Use of Home, or Publication 587, Business Use of Your Home (Including Use by Day-Care Providers).
And just as a side note, if your tax preparer ever tells you that a tax deduction is “too complicated” you need to find another tax preparer!
Work From Home As A Book Indexer
Are you patient, analytical, well read, and you don’t mind working alone? Do you have an excellent grasp of language and pay good attention to detail? If so you might enjoy working as a Book Indexer.
To be honest, I had always assumed that the indexes in the backs of books were created by computer. I know that MS Word has an index function, although I have never used it. But it turns out, that computers are just not all that good at creating a useful index, and so that task falls to freelance indexers.
I first found out about freelance opportunities for book indexers while reading Freelance Sprout. From there I found even more information from the American Society for Indexing (ASI).
There is a low barrier of entry for indexing. No specific degrees or credentials are required to be an indexer. However, publishers will look to see if you have subject matter expertise for indexing a technical book or manual. You can learn indexing by taking courses offered by your local college, by taking a correspondence course offered by the US Department of Agriculture, or there are a number of self-paced course offered by ASI.
Once you gain clients and experience, you can earn decent money. This is definitely not a get rich quick scheme! Full time experienced indexers can earn up to $50,000 per year, working from home.
According to ASI, most indexers find work by sending letters and resumes to publishers. Experienced indexers find most of their work comes from networking and referrals from satisfied clients.
If you have good attention to detail, and can work with tight deadlines, indexing could be a good work from home opportunity. Learn more at Freelance Sprout and American Society for Indexing (ASI).
How I Made The Move
Well, as you can probably tell, I am no longer on Blogger. It just goes to show that where there is a will, there is a way. If you are interested, I am posting my How To Switch from Blogger to Wordpress post over on Ninja Success. (It really doesn’t fit with the them of this blog!) Lots of thanks go to John at RareVictorian.com. He is the one the had the “secret” to making it all work.
Top 30 Tips for Staying Productive While Working From Home
I found this older post from ZenHabits today. I find that while I love working from home, I do sometimes find it hard to stay productive. There are so many distractions, and no one looking over my shoulder making sure I am working!
While I was reading the post I was struck by how much of the advice related to working at home the way you would work in an office. Things such as setting a schedule, limiting the number of hours you work, and taking breaks are all things that happen naturally with most “away from home” jobs. I tend to either have trouble getting started and spend all day procrastinating, or I get so involved in my work I work 12 or 14 hours straight and forget to eat. Honestly, I’m not sure how productive I really am after 10 hours of working without eating!
While all 30 work from home tips were great the last tip was my favorite.
30. Be grateful you’re working from home and not in some cubicle! That gratitude will motivate you to work harder, so you can continue to work from home.
So click on over to ZenHabits to read the rest of the 30 work from home tips, and find even more great tips in the comments.
Would you like to share your best tips for staying productive while working from home? Comment with them here and I’ll put them all together in a WFH Pro post and give you credit!
Those of you who know the joys of working from home, whether you’re self-employed or freelancing or telecommuting, know also the joys of procrastination and the lures of laying on the couch. Now, I’m as much in favor of a good nap as the next guy, but a nap should be a break, not your default work mode….
Unexpected "Sound Effects" on Conference Calls
As more and more people work from home and take company calls from there, it’s inevitable that we’ll be hearing more and more interesting sounds in the background going on at people’s homes. Everyone has heard the toddler trying to talk to daddy or mommy while they’re on an important conference call. Here are some of the other intriguing sounds you might be hearing in the background:
- Excessive slurping of coffee
- Small children to the extent that is sounds like the employee is moonlighting at a day care
- Dogs barking
- Toilets flushing
- Trains
- Cabs
- Heavy breathing
The office creates a sterile environment for conference calls devoid of ancillary noise but at home, life goes on and the presence of families and their activities provide a backdrop for the modern day conference call.
My favorite is the toilet flush. I have not personally experienced hearing one on a call, but I have had friends who have heard one go down (excuse the pun) on a call. The funny thing is that many times, the initiator of the sounds can be identified since often there is a limited group of call participants who are at home while most are in the office. How many of you have succumbed to the call of mother nature and muted a call during a pit stop?
I’ve experienced an employee conducting another phone call in parallel with a conference call that I was on with them and they accidentally added the other party and the conversation to the first call! Although it was not a memorable call to listen in on, about 7 of us were listening in on a call that we weren’t invited to. Our call participants went silent as we were overcome by another conversation.
While we try to make avid use of the mute button, inevitably there are mishaps. It’s inevitable that you will be on the wrong end of the equation at some point in your work from home life.
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