List of Tax Deductions

If you are self employed as a small business owner or a freelancer who isn't clear about what types of business expenses are tax deductible, the list of tax deductions posted in this article will be helpful.

Keep track of your business expenses for tax time.

Here is a list of business tax deductions allowed by the IRS:

If you are planning to deduct auto expenses from your business income, you will need to determine how often you use your vehicle for business purposes. Traveling to and from work is not considered a business expense, since you are not using the vehicle for the purpose of earning income at those times.

In addition to keeping detailed records of the number of miles driven for business purposes, you will also need to add up the cost of operating your vehicle throughout the yeas. Include these types of expenses on your list of tax deductions:

• Fuel and Oil
• Repairs
• Insurance
• Depreciation
• Parking
• Licenses and Fees

The 2007 rate for mileage driven for business purposes was set at 48.5 cents per mile.

When you are away from home for business reasons, you can deduct "ordinary and necessary expenses" from your trip. Be sure to keep receipts to support your claim for deductions for the following:

• Accommodation
• Transportation (includes travel costs and car rental fees)
• Meals while away from home

You can deduct the cost of running a business from your home if two requirements are met:

1. You must use a portion of your home regularly for business purposes, and this room, garage, or workshop must be used exclusively for business purposes.
2. Your home must be the main location where you conduct business. This provision could include meeting with clients on the premises or having a separate building on your property that you use for your business.

If your business qualifies for the home office deduction, you will want to include a percentage of the cost of these items on your return:

• Heat and Utilities
• Mortgage Interest
• Property Taxes
• Property Insurance
• Depreciation

The way to calculate the portion of the expense that is deductible for business purposes is as follows: Figure out the square footage of your home that is used for business purposes and the total square footage of your home.

If your office measures 12 feet x 10 feet, your office is 120 square feet in total. The total square footage of your home is 1,500 square feet. The percentage of your home used for business purposes is 120/1500 x 100 = 8% The portion of these home expenses that are deductible is 8 percent.

In a situation where you are storing samples or inventory in your home, the "exclusive use" provision does not apply. You would be able to deduct expenses incurred in running a business from your home. Whatever storage area or space you use doesn't need to be used exclusively for business purposes.

These types of expenses can be deducted from your business income, whether your business qualifies for the home office deductions or not:

• Office Supplies
• Equipment
• A Separate Phone Line for Business Purposes
• Long Distance Phone Calls Made for Business Purposes

These items cannot be deducted on your income tax return:

• The Cost of Your Home Telephone Line
• Traffic Tickets
• Clothing Worn to Work (if you wear a uniform, then that cost can be deducted)

If you still have questions after reading this list of tax deductions, please consult with an accountant to find out what deductions apply to your specific business situation.

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