. It is the taxpayer that is ultimately responsible for the accuracy of their tax return regardless of who was employed for tax preparation help.
In time, and with some effort on your part, you will be able to leave your day job and work from your home full-time and take advantage of all of the benefits a home based business has. The best part is you can take advantage of the home based business tax benefits as soon as you start your new business!
Owning a home based business allows you to deduct some personal expenses you wouldn’t usually be able to deduct. These things include but are not limited to: dining out, a new computer for the office, dental and medical expenses, and some vacation related expenses. The money you can deduct for operating a home based business is not insignificant and can amount to well over ten thousand dollars.
This IS the most complicated home based business tax benefit you get. It is also where most people get into trouble with the IRS because they didn’t correctly document their vehicle related deductions. If you are going to use vehicle deductions, I can not stress enough that you MUST document everything properly. Keeping a diary or travel log to track mileage, maintenance costs, etc. will save you time and many headaches.
How does the vehicle deduction work? Basically, you determine how much of the time you use your vehicle for your home based business as a percentage. You are then permitted to take that percentage of time and apply to the cost of operating your vehicle. For instance, if you use your vehicle 60 percent of the time for your home based business, you are permitted to deduct 60 percent of the costs of operating the vehicle.
First things first, in order to take advantage of this tax benefit, you must have proper documentation. This primarily means you need to save your receipts and record who you spoke to about your home business. Normally, you will be able to deduct up to 50 percent of the cost, but make sure you check beforehand.
As long as it is related to your home based business and document the costs properly, you can also deduct up to 100 percent of the expenses of entertaining people in your home. You may come to realize the tax benefits are much greater if you entertain in your home instead of taking someone to your favorite restaurant.
This one of the more intricate home based business tax benefits, but it has the potential to save you thousands of dollars every year you own your business.
In evaluating whether a someone meets the standards of the bona fide residence test, the IRS looks closely at the location of the taxpayer’s “tax home,” “abode,” “domicile” and “bona fide residence.” A thorough understanding of these housing categories is crucial for anyone hoping to claim the foreign earned income exclusion as part of their tax return preparation process.
The physical presence test can also qualify an expat taxpayer for the foreign earned income exclusion, based on a minimum number of days spent abroad during the tax year.
Clearly, qualified Tax Preparation assistance is advisable for Canada expats hoping to take advantage of all available tax-saving provisions while complying with all legal requirements. Tax Planner CPA, a firm that specializes in providing tax return preparation services to Americans living overseas, has a web site that explains many of the factors involved in developing an effective expat tax strategy