Like I mentioned earlier, too much to go into here... but... Each
state has different rules and each individual has different situations.
There are depreciation, local codes, and costs for incorporation to
mention a few. That is why I suggest speaking with an accountant in
your area. I have saved thousands of dollars each year since 1992
though your mileage may very. But it is worth looking into - if alone
for the savings in payroll taxes (sole proprietor taxes).
On 3/7/2014 2:29 PM, Dan Covill wrote:
I agree 100% with those who advise against deducting the home office. When I
moved home in 2002 I worked out the deduction, which in my case would have been
about $300/year. At 25%, I'd be able to reduce my income tax by $75, at the
cost of filing the additional statement with my return and maintaining the
records so that I could increase the capital gain if/when I sold the house.
(Ed's right, anything you depreciate reduces the cost basis and increases your
capital gain.)
So I said, how much accounting can I buy for $75? "Not much at all!" is the
answer. So forget it.
When I first started my own business, in 1981, my new accountant told me, "Please
don't get into spending $500 on something to save $100 in taxes." It was good
advice.
Dan Covill
From: [email protected]
To: [email protected]
Subject: Re: [NF]: Pennsylvania Sales Tax
Date: Fri, 7 Mar 2014 20:39:23 +0000
On Mar 7, 2014, at 2:01 PM, Dennis Schuette <[email protected]> wrote:
I recently had the 'home office' discussion with my tax accountant. Apparently
a recent rule change allows for a fixed deduction of $500/year with little
documentation. It's similar to deducting the mileage rate (55.5 cents/mile, I
think) instead of vehicle expenses.
Of course, you may still track % of space and expenses if it's worth the effort.
Also, remember that the deduction is actually a depreciation, so it reduces the
effective purchase price of the house. When you sell, the profit for tax
purposes is the sale price minus the purchase price minus any claimed
depreciation. So you might end up with a bigger tax bill later.
-- Ed Leafe
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