Ever considered the tax benefits of working from home? If not, you really should… you may be very pleasantly surprised.

I must point out at this juncture that I’m NOT an accountant, and what applies here in Ireland may be totally different in your particular tax jurisdiction- consider that last sentence a “disclaimer”….

If, like me, you have no objection to paying taxes which are necessary for the provision of services that benefit everyone in your country but wholeheartedly object to paying vast amounts of tax for a Government to squander or to bailout banks, wealthy property developers etc -and I’m sure this strikes a particular chord with any Irish citizens reading this- then you will be delighted to know that there are, indeed, major tax benefits attached to working from home.

So, what are these work from home tax benefits? Depending on how you set-up your home-based business, the tax benefits you will gain will differ. My advice to you would be to find a reputable accountant and seek their advice before doing anything else. Best way to find a reputable accountant? Personal recommendation from a business person in your locale.

Here, in Ireland, most people just starting up a home-based business, will trade as a “sole trader” then, as the money starts to roll-in, they may choose to form a Limited Company. There are advantages and disadvantages to both statuses from a tax perspective, depending on your personal situation and I won’t go into them in too much detail here. Again, seek a consultation from an accountant as to which status will give you the most tax benefits.

“If I’m working from home, are there any tax benefits to being VAT-registered as a sole trader?” In Ireland, and I suspect the same applies in the UK, YES there are huge benefits to being registered for VAT since you can reclaim ALL the VAT back on goods and services you buy which are used in the running of your home business. I’m sure you’ve bought products from ClickBank and other affiliate marketplaces – for some you are charged VAT/Sales Tax and this is all refundable at the end of every VAT period if you are a VAT- registered trader.

There are other tax benefits of working from home – since your home office is, in fact, a workplace, you can offset a percentage of your utility bills against the profits of your home-based business i.e electricity, heating, telephone etc.

If you have a car, and you use it for travelling to Networking meetings etc, then a percentage of the running costs of your car can also be claimed as valid business expenses and can also be used to reduce the tax liability on your profits.

Travel to and from and attendance at Seminars/Conferences in the course of your home business are also tax deductible.

You may think that just working on your laptop from your dining room table holds no tax benefits to you but you may be wrong! Go speak to an accountant and find out just how many tax benefits there are to working from home.

Let’s face it, we are all being asked to pay so much in the way of tax these days, in one form or another, so why not check out how you can legally avail of any tax benefits you may be entitled to by working from home? Better the money in your own pocket than in that of Revenue

So, if you’re considering working from home, and setting-up a home-based online business, when considering the advantages of such a venture – and, believe me, there are MANY- work the hours you want, work whilst you travel etc etc- why not also consider the tax benefits of working from home? You could be very pleasantly surprised

If you use a DEDICATED part of your home for your home business, you may be able to deduct certain expenses and costs. It doesn’t matter if you are self-employed or working for someone else, the same rules apply.

Of course, the Internal Revenue Service has requirements for these deductions and, generally, it is easier to meet these requirements if you are self-employed as opposed to working for someone else from your home.

Here are some of the requirements:

• The area must be used regularly and exclusively for the purpose of your business, regularly for daycare, or for storage of inventory or product samples. Hence, your dining room table won’t qualify!
• The section of your home dedicated to your business must be your principal place of business, where you meet with your clients in the normal course of your business, or where you perform the administration and management duties of your business. Billing your clients, ordering supplies, doing the bookkeeping, calling people to set up appointments, forwarding orders or writing reports all qualify as administrative duties if this is the only place you have to do these things.
• In order to deduct the expenses of your home office if you are an employee working for someone else, your home office must be for your employer’s convenience, for example, if there is no place at your employer’s office for you to work.

Here are just a few of the expenses the IRS allows you to claim a percentage of for your home office:

• Rent
• Real Estate Taxes
• Deductible Mortgage Interest
• Utilities
• Insurance
• Depreciation
• Painting
• Repairs

The proportion you can deduct depends on the percentage of your home dedicated to your home office. Your deductions are limited if the income from your business is less than your business expenses.

If you are self-employed, use IRS Form 8829 to calculate your deductions and report the amount on Schedule C.

If you are an employee, use the worksheet in IRS Publication 587, “Business Use of Your Home”, to figure your allowed expenses. These are then claimed as itemized deductions on Schedule A. All the forms you need can be found on the Internal Revenue Website.