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Answers to Your Tax Questions


By Wayne M. Davies
Contributing Writer
Article Date: 03.11.03


Hello Wayne,

I'm starting a home business.

Although I haven't made money yet, what can I deduct at tax time?

Where can I find the answers w/out searching all over the web.

Have a nice week, Mary Rushing
http://www.HealthySuccess.ca

Hi Mary,

Your question is common one. When it comes to business expenses, the tax code is quite generous -- you can deduct any expense that is "ordinary and necessary" to your business. Here's how the IRS defines these 2 requirements:

By "ordinary", the tax code simply means an expense that is "common and accepted" in your type of business.

By "necessary", the tax code means an expense that is appropriate and helpful for your business. And here's a key concept: An expense does not have to be indispensable to be considered necessary.

For more specific examples of typical expenses, get a copy of Schedule C, the form that you'll use to report your Sole Proprietorship on your personal income tax return. There's plenty of categories listed here -- some are obvious, others are not.

To get more small biz tax info than you'll know what to do with, here's a couple of free resources:

1. My bi-weekly ezine, "Make My Life Less Taxing." To subscribe, visit http://www.YouSaveOnTaxes.com -- for subscribing, you'll get a free ebook on taxes that includes a chapter on "How To Make Sense Out Of Nonsense: The Small Business Owner's Guide To The Wild & Wacky World of Taxes" (and whether you realize it or not, in the eyes of the IRS, a person like yourself who has just started a home business is considered a "small business owner.")

2. Check out http://www.taxmama.com -- without a doubt, the best website on taxes I've ever seen.

Sincerely,
Wayne


About the Author:
Wayne M. Davies is author of the new eBook, "The Tax Reduction Toolkit: 29 Little-Known Legal Loopholes That Will Reduce Your Taxes By Thousands (For Small Business Owners and Self-Employed People Only!) Don't file another tax return until you visit: http://www.YouSaveOnTaxes.com/toolkit.html



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