Home Office Expenses Worksheet: Fill & Download for Free

Some common tax mistakes for small businesses:forget to write off all expensesIf you have a merchant account, you get a 1099 from the company that includes your sales with sales taxes. You must report your sales but make sure take the tax out of it. I am assuming you paid quarterly sales tax payments throughout the year.Depreciation on equipment or computers etc.Make sure you dont mix up contractors with employees. that is a major No No. Correct employee classification is important.If you have a home office, you are allowed to deduct many of the home expenses as businessTrack your mileage during the year and have a worksheet with details as to how many daily business miles and purpose of the miles driven.Track all office expenses, repairs, supplies etctrack your cost of goods sold as well.

The law affects small businesses in many ways, particularly via a complex 20% business income deduction for pass-through businesses—those that pay taxes through the individuals rather than through the corporation.3Some deductions that have been eliminated include:4Entertainment deductionDomestic production activities deductionLocal lobbying expenses deductionEmployees' parking, mass transit, or commuting expenses deduction1. Self-Employment TaxThe self-employment tax refers to the employer portion of Medicare and Social Security taxes that self-employed people must pay. Everyone who works must pay these taxes, which for 2021 are 7.65% for employees and 15.30% for the self-employed. Here’s how the rates break down:56.2% Social Security tax each for employee and employer on the first $142,800 in wages1.45% Medicare tax each for employee and employer with no wage limitYou will owe an additional Medicare tax of 0.9% in the following situations:5Filing StatusIncomeSingle$200,000Married filing jointly$250,000The income thresholds for additional Medicare tax apply not just to self-employment income, but to your combined wages, compensation, and self-employment income. So if you have $100,000 in self-employment income and your spouse has $160,000 in wage income, you’ll have to pay the additional Medicare tax of 0.9% on the $10,000 by which your joint income exceeds the $250,000 threshold.Paying extra taxes to be your own boss is no fun. The good news is that the self-employment tax will cost you less than you might think because you get to deduct half of your self-employment tax from your net income. The IRS treats the “employer” portion of the self-employment tax as a business expense and allows you to deduct it accordingly. What’s more, you only pay self-employment tax on 92.35% of your net, not gross, business income.6Remember, you're paying the first 7.65% no matter whom you work for. And when you work for someone else, you’re indirectly paying the employer portion because that’s money your employer can’t afford to add to your salary.2. Home OfficeThe home office deduction is one of the more complex deductions. In short, the cost of any workspace that you use regularly and exclusively for your business, regardless of whether you rent or own it, can be deducted as a home office expense. You are basically on the honor system, but you should be prepared to defend your deduction in the event of an IRS audit. One way to do this is to prepare a diagram of your workspace, with accurate measurements, in case you are required to submit this information to substantiate your deduction, which uses the square feet of your workspace in its calculation.In addition to the office space itself, the expenses you can deduct for your home office include the business percentage of deductible mortgage interest, home depreciation, property taxes, utilities, homeowners insurance, and home maintenance that you pay during the year. If your home office occupies 15% of your home, for example, then 15% of your annual electricity bill becomes tax-deductible. Some of these deductions, such as mortgage interest and home depreciation, apply only to those who own rather than rent their home office space.You have two choices for calculating your home office deduction: the standard method or the simplified option, and you don’t have to use the same method every year. The standard method requires you to calculate your actual home office expenses. The simplified option lets you multiply an IRS-determined rate by your home office square footage. To use the simplified option, your home office must not be larger than 300 square feet and you cannot deduct depreciation or home-related itemized deductions.7The simplified option might be a clear choice if you’re pressed for time or can’t pull together good records of your deductible home office expenses. However, because the simplified option is calculated as $5 per square foot, with a maximum of 300 square feet, the most you’ll be able to deduct is $1,500.7 If you want to make sure you’re claiming the largest home office deduction you’re entitled to, you’ll want to calculate the deduction using both the regular and simplified methods. If you choose the standard method, calculate the deduction using IRS form 8829, Expenses for Business Use of Your Home.83. Internet and Phone BillsRegardless of whether you claim the home office deduction, you can deduct your business phone, fax, and internet expenses. The key is to deduct only the expenses directly related to your business. If you have just one phone, you shouldn't deduct your entire monthly bill, which includes both personal and business use. You should only deduct costs that specifically relate to your business. If you have a second phone line that you use exclusively for business, however, you can deduct 100% of that cost. By the same token, you would only deduct your monthly internet expenses in proportion to how much of your time online is related to business—perhaps 25% to 50%.94. Health Insurance PremiumsIf you are self-employed, pay for your own health insurance premiums, and were not eligible to participate in a plan through your spouse's employer, you can deduct all of your health, dental, and qualified long-term care insurance premiums. You can also deduct premiums that you paid to provide coverage for your spouse, your dependents, and your children who were younger than 27 at year-end, even if they aren't dependents. Calculate the deduction using the Self-Employed Health Insurance Deduction Worksheet in IRS publication 535.95. MealsA meal is a tax-deductible business expense when you are traveling for business or entertaining a client. The meal cannot be lavish or extravagant under the circumstances and you can only deduct 50% of the meal's actual cost if you keep your receipts, or 50% of the standard meal allowance if you keep records of the time, place, and business purpose of your travel but not your actual meal receipts. The lunch you eat alone at your desk is not tax-deductible.96. TravelTo qualify as a tax deduction, business travel must last longer than an ordinary workday, require you to get sleep or rest, and take place away from the general area of your tax home (usually, outside the city where your business is located).Further, to be considered a business trip, you should have a specific business purpose planned before you leave home and you must actually engage in business activity—such as finding new customers, meeting with clients, or learning new skills directly related to your business—while you are on the road. Handing out business cards at a bar during your friend’s bachelor party won’t make your trip to Vegas tax-deductible. Keep complete and accurate records and receipts for your business travel expenses and activities, as this deduction often draws scrutiny from the IRS.Deductible travel expenses include the cost of transportation to and from your destination (such as plane fare), the cost of transportation at your destination (such as car rental, Uber fare, or subway tickets), lodging, and meals. You can’t deduct lavish or extravagant expenses, but you don’t have to choose the cheapest options available, either. You, not your fellow taxpayers, will be paying the bulk of your travel costs, so it's in your interest to keep them reasonable.Your travel expenses for business are 100% deductible, except for meals, which are limited to 50%.10 If your trip combines business with pleasure, things get a lot more complicated; in a nutshell, you can only deduct the expenses related to the business portion of your trip—and don't forget that the business part needs to be planned ahead.7. Vehicle UseWhen you use your car for business, your expenses for those drives are tax-deductible. Make sure to keep excellent records of the date, mileage, and purpose for each trip, and don't try to claim personal car trips as business car trips. You can calculate your deduction using either the standard mileage rate (determined annually by the IRS; it's 58 cents per mile in 2019) or your actual expenses.9The standard mileage rate is the easiest because it requires minimal record-keeping and calculation. Just write down the business miles you drive and the dates you drive them. Then, multiply your total annual business miles by the standard mileage rate. This amount is your deductible expense.To use the actual expense method, you must calculate the percentage of driving you did for business all year as well as the total cost of operating your car, including gas, oil changes, registration fees, repairs, and car insurance. If you spent $3,000 on car operating expenses and used your car for business 10% of the time, your deduction would be $300. As with the home office deduction, it may be worth calculating the deduction both ways so you can claim the larger amount.8. InterestInterest on a business loan from a bank is a tax-deductible business expense.9 Credit card interest is not tax-deductible when you incur the interest for personal purchases, but when the interest applies to business purchases, it is tax-deductible. That said, it's always cheaper to spend only the money you already have and not incur any interest expenses at all. A tax deduction only gives you some of your money back, not all of it, so try to avoid borrowing money. For some businesses, though, borrowing may be the only way to get up and running, to sustain the business through slow periods, or to ramp up for busy periods.9. Publications and SubscriptionsThe cost of specialized magazines, journals, and books directly related to your business is tax-deductible.11 A daily newspaper, for example, would not be specific enough to be considered a business expense, but a subscription to "Nation's Restaurant News" would be tax-deductible if you are a restaurant owner, and Nathan Myhrvold's several-hundred-dollar "Modernist Cuisine" box set is a legitimate book purchase for a self-employed, high-end personal chef.10. EducationAny education expenses you want to deduct must be related to maintaining or improving your skills for your existing business; the cost of classes to prepare for a new line of work isn't deductible.9 If you're a real estate consultant, taking a course called "Real Estate Investment Analysis" to brush up on your skills would be tax-deductible, but a class on how to teach yoga would not be.11. Business InsuranceDo you pay premiums for any type of insurance to protect your business, such as fire insurance, credit insurance, car insurance on a business vehicle, or business liability insurance? If so, you can deduct your premiums.9 Some people don't like paying insurance premiums because they perceive them as a waste of money if they never have to file a claim. The business insurance tax deduction can help ease that dislike.12. RentIf you rent out an office space, you can deduct the amount you pay for rent. You can also deduct amounts paid for the equipment you rent. And if you have to pay a fee to cancel a business lease, that expense is deductible, too. But you can't deduct rent expenses on any property that you own even partially.913. Startup CostsThe IRS usually requires you to deduct major expenses over time as capital expenses rather than all at once. However, you can deduct up to $5,000 in business startup costs.9 Examples of tax-deductible startup costs include market research and travel related to starting your business, scoping out potential business locations, advertising, attorney fees, and accountant fees. If you set up a corporation or LLC for your business, you can deduct up to $5,000 more in organizational costs such as state filing fees and legal fees. Professional fees to consultants, attorneys, accountants, and the like are also deductible at any time, even if they aren't startup costs. Business expenses such as buying equipment or vehicles aren’t considered startup costs, but they can be depreciated or amortized as capital expenditures.14. AdvertisingDo you pay for Facebook ads, Google ads, a website, a billboard, a TV commercial, or mailed flyers? The costs you incur to advertise your business are tax-deductible. You can even deduct the cost of advertising that encourages people to donate to charity while also putting your business' name before the public in the hope of gaining customers. A sign advertising "Holiday Toy Drive sponsored by Robert's Hot Dogs," for example, would be tax-deductible.915. Retirement Plan ContributionsOne deduction you can take going into business for yourself that is especially worthwhile: the deduction for self-employed retirement plan contributions. Contributions to SEP-IRAs, SIMPLE IRAs, and solo 401(k)s reduce your tax bill now and help you rack up tax-deferred investment gains for later.12For the 2019 tax year, for example, you could feasibly contribute as much as $19,000 in deferred salary ($25,000, with the $6,000 catch-up contribution, if you're 50 or older) plus another 25% of your net self-employment earnings after deducting one-half of self-employment tax and contributions for yourself, up to a maximum of $56,000 (not counting catch-up contributions) for both contribution categories, with a self-employed 401(k).13In 2020, the contribution limit rises to $19,500 ($6,500 catch-up contribution for a total of $26,000). And the maximum employer contribution you can make for yourself rises to $57,000 (with the catch-up contribution, if you're old enough, that's $63,500).Contribution limits vary by plan type and the IRS adjusts the maximums annually. Of course, you can’t contribute more than you earn, and this benefit will only help you if you have enough profits to take advantage of it.Was taken from “investopedia”

There are numerous “rules of thumb” about refinancing. They claim that you should refinance only if you can lower your interest rate x%.These rules are universally wrong—and in many cases, they are harmful, as they cause homeowners to refrain from lowering their rates when they could benefit, thereby forgoing thousands of dollars in savings.There is a simple method to determine whether it makes sense to refinance. First, look at your current mortgage statement. Write down your balance and monthly payment of principal and interest—don’t include the taxes and insurance, as these won’t change when you refinance.Next, get in contact with a mortgage lender in your area. You will not be making any sort of commitment to do business with them at this point, but you will be asking them for some important information.You should have some idea of your credit score. You can get this from one of the several free sites. Your credit score will determine the interest rate you can get. Be aware that all lenders are working with the same guidelines—those put forth by Fannie Mae and Freddie Mac. These guidelines include risk-based pricing, which calls for adjustments to the cost of your loan according to your credit score and loan to value ratio.You want two pieces of information from the lender: the interest rate you might be able to get today, and the non-recurring closing costs for your loan. When you speak with the loan officer, you can tell them you are looking for a loan of a certain amount, that your home is worth whatever you think it’s worth, and your credit score is whatever you believe it to be.This is enough information for any lender to give you a very good idea of the rate they’d be able to offer you if you began the process and locked your rate today.The loan officer should also be able to give you a close estimate of the non-recurring closing costs for a new loan. These are the costs and fees that you’ll incur only as a result of getting a new loan. They are separate from recurring items, such as prorated interest and deposits to a new impound account for taxes and insurance, assuming you choose to have one.Non-recurring closing costs include title insurance, escrow fees, appraisal, lender fees for underwriting and processing, notary and recording. In most cases, borrowers choose to add these fees to their new loan rather than pay them out of pocket.Ask the loan officer to prepare a closing cost worksheet. This will itemize all the costs for the loan. Protip #1: don’t ask for a “good faith estimate.” This document is obsolete and no longer exists. You also don’t need a Loan Estimate at this point. This is a legal document required for compliance. A lender must provide one to the borrower once they have submitted an Application. Legally, your status is one of credit inquiry. Because the Loan Estimate is a legal document, the lender’s process to prepare one is not trivial. Those people who say you should gather loan estimates from three or four lenders are unfamiliar with the real world of mortgage banking. While you could submit applications with multiple lenders—including enough personal information for them to underwrite the loan and issue a lending decision—there is no advantage to you in doing this. You are looking for information you can use to make a decision whether or not to proceed with a refinance.Now that you know what the non-recurring closing costs are, along with the rate you’re likely to get, you can do some simple calculations on which to base your decision.For this example, we’ll say that your loan balance is $300,000, your rate is 4.75% and your monthly payment (principal and interest only) is $1,675. You learn from the closing cost worksheet that the non-recurring closing costs amount to $4,000. You can get a new loan with a rate of 4.25%. You would add the closing costs into the new loan, so your new loan balance would be $304,000. Your payment would drop by $180 per month. This may seem like a worthwhile amount to save each month.Protip #2: Disregard the amount you “save” each month. It is misleading. Your payment will drop for two reasons: you will have a lower interest rate—that’s the whole point of refinancing—but you will also extend the term of your loan. In this example, your old loan had 26 years remaining. Amortizing a new loan over a longer period will lower the payment even if you did not lower the interest rate.You reduce your rate by .50%. Multiply your current loan balance of $300,000 by that amount. This is how much you’ll actually save each year: $1,500. Divide the non-recurring closing costs, by the annual interest savings. In this example, 4,000 divided by 1,500 is 2.67. This is the time it will take to recover the cost of getting the new loan. That is your “break even” point.If that number is acceptable to you, proceed with your refinance. If it’s not, don’t. it is as simple as that.There are other calculations you could do, such as your net savings at certain time horizons—5 years, 10 years, life of loan—but the simple calculation I’ve described here is enough for you to decide objectively whether to move forward.There is one other simple calculation you might employ if you are hoping to pay your mortgage off as soon as possible. For this, you’ll need one of the myriad amortization calculators available on the web. Find out how much you’d shorten your loan’s term if you increased your monthly payment over the one called for in the new promissory note. Some borrowers refinance to lower their interest rate, but choose to make the same payment as before. This is a painless way to make “extra” loan payments. For our example loan, reducing the rate to 4.25% from 4.75% but continuing to make the same $1,675 payment as before will shorten the new loan’s term to 24 years, cutting two years from the time needed to pay off the home.One bit of advice from a long-time loan officer who has helped thousands of people refinance their mortgages: make a plan for the money you’ll save by refinancing. If you don’t the money from the reduced payment will simply be absorbed into your budget, and you won’t notice any difference in your life. If you can allocate the reduced payment either to pay off more expensive debt, or to retiring your mortgage faster or some other worthwhile purpose, you will have used the refinance to the maximum advantage beyond mere bragging rights to having lowest rate in your neighborhood.I hope this is helpful.