Here is a comment I received from a tax client recently: “Why do people make such a big deal about the home office deduction? It’s not really worth that much, right?” As with most tax questions the answer to this question: “It depends.” It depends on two major factors contributing to calculate the deductible costs for small businesses. Read on to find out whether it is worthwhile for you.

The two most important factors affecting the level of your home-office deduction: 1) Business percentage, and 2) home expenses. Let’s take a closer look at the individual elements, so that you have a general idea of how much money you can save by getting these deductions.

Business Use percent. You need two things for you: to know the square your home office, and the square house, apartment or condo. How do you determine that? Quite simply, with a tape measure. If you do not know the square feet of office, take a tape measure and find out. The same is true for the space walk from home.

Then take the home office square feet, the house they share throughout the square and you now know, the business use percentage of your home office. Here’s a simple example: Your home office is 15 meters by 20 meters, or 300 square feet. My house is 1500 square feet. 300 divided in 1500 is 20%. Your business use percentage is 20%. To obtain a deduction of 20% in various household expenses, take detailed below.

Home expenses. Here, where you get to do more number crunching. Add the following annual expenses: mortgage interest, property taxes, homeowner’s insurance, repairs and maintenance, utilities (eg gas, electricity, water, wastewater and waste services), homeowner association taxes, depreciation and amortization. Let us assume that all these elements add up to $ 2,500. Then you have $ 2500 increase by 20% to $ 500, which enter the actual level of your home-office deduction.

Of course your numbers will likely than those in the above example uses different, but that’s basically how it works deduction. If you rent your house, instead they happen to possess, would you describe your annual rent expense instead of mortgage interest, and then you will probably have no property tax.

So you get a deduction of $ 500. If you opt for the 30% federal tax bracket (15% of income tax plus 15% for self-employment tax), $ 500 times 30% $ 150, is your actual tax savings. With some, $ 150 seem like an insignificant amount and not worthy of the record keeping and tax reporting obligations. Others would look forward to an extra $ 150 in your pocket instead of Uncle Sam’s have. The choice is obviously yours.

I urge you to this simple fact: many small prints add up to big tax savings to consider. If you can be the trigger, take the deduction. How long does it take for you to have the accounts needed to save $ 150? If you do it takes an hour, you have just paid himself $ 150 for one hours work, which is a good wage in the economy.

Of course, if it is your house bigger than the above example is used and / or your business use percentage is greater than the above example, you can clear more than $ 150. Some self-realize a tax savings of hundreds or even thousands of dollars per year over the home-office deduction. As already mentioned, it all depends on the numbers.

Editor Tips

There are also car and truck business tax credits in the new Länder stimulus package that was passed recently. In the first year of the depreciation that you claim on your business vehicle, you can deduct more than $ 10,000 for cars and over $ 11,000 for light trucks and vans.

For example, some people find the specific time requirements in the same way exchanges take too restrictive, so that they do not even consider a similar kind-exchanges. Others will find the book too difficult to circumvent requirements. There is a solution though! Once you share the basics of a-like species.

Some will find the most commonly overlooked tax deductions related to your medical needs. Things like eyeglasses and hearing aids or crutches, canes and orthopedic shoes may also be deducted. Even your alcohol and drug abuse treatment could be written off, if you know how to do this. But you get used it did’t because you do not your taxes at the last minute.