Tax Returns and Working From Home: 4 Tips for Getting Better Tax Refunds
Are you running a business from your home office? If so, you should prepare early for your tax return. One crucial step when filing taxes is ensuring you're getting all the write-offs you are entitled to. Unfortunately, work-from-home entrepreneurs may miss out on these benefits due to lack of information on how to go about the process. Keep reading for some valuable tips on how to get better tax refunds as you do your taxes.
Claim All Work-Related Expenses
When running a business from home, it is hard to differentiate some work and personal expenses due to the overlapping of the two. However, there are some write-offs you can get that would significantly reduce your taxes. Some important ones include the following:
- Laptops and phones used for work purposes
- Phone and internet bill
- Cleaning expenses for your home office
- Purchase and depreciation of office furniture and equipment
- A portion of the electricity bill used for business purposes
If you occasionally go for business meetings outside your home, you can claim travel expenses as well. Similarly, if you take a course related to the business, you can write it off as a work expense.
Get and Keep Purchase Receipts
You cannot claim tax refunds without corresponding receipts to support the purchase or expense. Therefore, make a point of asking for receipts for all your business expenses. These include furniture purchase receipts and bills. Create a receipt filing system in your office for easy tracking of these documents when filing your taxes. This not only allows you to claim as many write-offs as possible but also saves you from forgetting some expenses.
Provide Accurate Tax Records
When running a business from home, one may be at risk of providing inaccurate info on income and expenses. This is especially true if you run online businesses or digital investments or have no reliable income tracking system. Note that just because you don't have an accurate system doesn't mean the government doesn't either. The ATO can access banking information, and they can even have resources to verify the data provided. Thus, be as accurate as possible. Also, don't inflate your tax refunds as the info is verifiable as well.
File Taxes Early
Late filing of taxes can cause a lot of stress to an entrepreneur. With little time to work with, you won't be able to calculate your incomes accurately or list all the potential write-offs. As a result, you may end up paying more in taxes when you could get decent refunds. Make arrangements to do your taxes at least a month or more before the due date. This not only ensures accuracy but also leaves you adequate time to consult with tax professionals whenever necessary.
Follow these simple steps when filing tax returns to ensure you get better refunds. Contact an accountant for professional assistance!