Tax Deductions for the Work At Home Professional

If you work from home as a freelance writer, blogger, or even customer service representative, you may have questions about your taxes. If you’ve looked over the countless number of websites dedicated to the subject, you’ve undoubtedly found that much of the information is contradictory. One site will tell you that you can deduct a portion of your home expenses; another will tell you that you cannot. One site will tell you that you can deduct your phone bill; another will tell you that you cannot.It can be incredibly overwhelming when you aren’t finding the same information on every site. It can be even more daunting once you realize that one simple mistake can have the IRS knocking on your door. Here are tax deductions that every work-at-home professional can take advantage of:

Internet
If you use the internet for your home business, and chances are that you do, you can deduct a portion of your internet bill from your taxes. For instance: if you use the internet 50 percent of the time for work, and 50 percent of the time for pleasure, you can deduct 50 percent of your bill from your taxes. What does this mean? It means that you can deduct the portion of your internet bill that correlates with its percentage of use required for your work.

Phone
If you’ve only got one phone in your home, you cannot deduct its cost from your taxes; no matter if you use it for your business or not. However, if you’ve got a second phone line that is dedicated to your business, mobile or landline, you can deduct that phone’s bill from your taxes.

Unpaid Invoices
Clients that don’t pay can be the bane of a freelancer’s existence. All of the work and none of the reward can be disappointing. Happily, the IRS allows you to claim unpaid invoices on your taxes. The key, here, is that those same invoices must be counted as part of your gross income before you can deduct them, even though they weren’t paid.

PayPal Fees
More than half of all people who work at home use PayPal as their source for receiving payment. Because PayPal charges fees, and those fees are a necessary part of using PayPal, they can be deducted. This is not only one of the most overlooked deductions, but one that most people don’t even know exists! Happily, you don’t have to keep track of every charge that you incur through PayPal; simply print out your account history at the end of the year and it’s all laid out for you.

Research Materials
If you purchase books, magazines or even software to learn how to do your job better, you can deduct the cost of these materials from your taxes. For instance, if you purchase a “For Dummies” book related to blogging, you can deduct the cost of that book from your federal income tax filing.

There are several tax deductions that are available for those who work from home; you just need to know where to look. Rather than rely on your friend’s neighbor’s cousin to tell you what you can and can’t deduct, consult sites like IRS.gov to learn the legalities of tax deductions for the work at home professional.