Take advantage of every legal opportunity to reduce your taxes. Recent changes in the law benefit business owners who use their homes—whether the home is rented or owned—as an administrative and management base but work at other locations, such as plumbers, general contractors, and health-care professionals.
Ask your tax professional to analyze your business regularly so you don’t miss important deductions. If you own the home where your office is located, discuss whether or not to take a depreciation deduction for the office space. Sometimes it pays; sometimes it doesn’t.
Document deductible items. These usually include such costs as computers and other equipment, telephone charges, furnishings, and pro-rated portions of rent, utilities, home insurance, and homeowner association fees.
For detailed information, go to the Internal Revenue Service Web site, www.irs.ustreas.gov, and download IRS Publication 587, Business Use of Your Home.