IC
Posted By: Lynn on 2006-03-24
In Reply to: I deduct all expenses that relate to my home office-% of utilities, taxes, repairs to that room, --s - Debra
My deductions this year came to $19,958. I use the home office deduction and home depreciation as well as the indirect expenses for heating, electricity, water, cable modem, and extra phone line (and I live in an area where electricity and heating bill are sky high). I buy a new computer about every other year and use the one-time depreciation. I deduct things like paper clips, pens, notebooks, desk lamp, word books, my monthly prescribing reference subscription, office chairs (I've gone through three this year), printer cartridges, fax cartridges (these last two can add up quickly), etc. Anything that you do to your home office counts as a direct expense, so when I got new curtains for the windows they went on my expenses as well. You can indirect expense repairs and upkeep to your house. I don't fudge, because the IRS has always been rather ambivalent about the home office deduction, so I keep EVERY receipt. I've also always used Tax Cut or Turbo Tax to prepare my taxes. I don't pay quarterly taxes. When I first started as an IC, I contacted the IRS, and with the help of an agent determined that the easiest way to pay taxes based on my IC status was to actually have my husband decrease his deductions from 5 to 3 (using the amount of taxes paid on our combined income from the year before). It helps to realize that as an IC you are able to deduct things that you would have paid for anyway like your mortgage, utilities, and upkeep of your home. I've done much better as an IC than I ever did as an employee.
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