- 09 Nov 2005
- 14 Nov 2005
People work from home for the deductions? I think the IRS might consider that as a basis for challenging such a deduction. You should be choosing to work from home simply because it makes business sense. If it means you don't have to pay rent on an office, or if it's simply more convenient, then those should be good enough reasons. OTOH, if you're "working from home" as a way to justify deducting a percentage of your expenses, then it's likely those deductions will be disallowed.
... you claim the electric, telephone, cell phone, heat bills, and a portion for home office. This helps you out tax wise and before your business, they were just your monthly everyday bills. Now they help your business show a loss to some extent.
I think this is where you've created some confusion... if you meant that you deduct a portion of these various expenses on your schedule C, and the portion you deduct reflects the space you've set aside exclusively for business purposes, then you should be okay ... unless you're showing a loss. In that case, you can do it for a couple of years, but if you do not show a profit in at least 3 years during the last 5 tax years, then your deductions may be limited. The IRS can apply this test retroactively! See http://www.irs.gov/publications/p535/ch01.html#d0e809
Eli Mantel - 15 Nov 2005
Eli, thanks for your input. Yes, deducting a portion that associates with your home office. I use a spare bedroom specifically for these purposes. It holds my inventory, a seperate table for facials, a closet for my paperwork, samples. etc... I did that since I was told by 2 acccounts that I work with, plus my accountant/lawyer (and an uncle that works for the IRS - he would know!!!, he was just hard to get a hold of so I asked others in the meantime) that by using a spare room as an office, I could use a percentage for deductions. Sorry, guess I should have worded it better (so I will remove it above so it doens't OFFEND anyone). Not to say that ALL household expenses are 100% deductible. I would never do it if it were totally wrong. Mine is a small percentage, but anything helps since I only work 2 days a week and do MK. I like to be at home with my daughter and the deductions help with my business.
Right now I show a profit of $1,000 after I take my deductions (office, supplies, gifts, etc). If I don't use any of the home office expenses, it would show that I have more of a profit. That's what I meant by your Schedule C showing more of a loss. One guy made a comment about his wifes Schedule C showing a loss. Well, it may have to do with some of those deductions being used.
Sorry for deleting my above post but It's one thing to disagree and post it politely, but it's another to be down right rude. It's understandable that some may hate MK, but please don't take it out on others. I would hope you are not like that in person! (sorry eli, this was not meant for you).
I wish everyone good luck in their future and with whatever decisions they make. This board is not for me. I'm devoted to my part-time job, MK for fun, and my daughter. I just wanted to come here for some insight & guidence but that's not what I got. Good luck to all and I wish you well!!!
There was no bashing or hating of MK or you. I simply pointed out that you were giving incorrect and misleading tax information. That's all.
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