The Amateur Financier

(Once again, I’m pleased to share a well-written and interesting guest blog post.  This time, you can learn about some of the tax deductions that might be available if you work from home, either full or part time (say, writing a personal finance blog, for example).  If you haven’t filed your taxes yet (if so, what are you waiting for?  But I digress..), there’s quite a few opportunities for some tax savings available, so be sure to read on.)

Although there are plenty of tax deductions people know about like property taxes and charitable donations, there are a ton of less well known deductions that can really add up. There’s a ton of information available on this subject out there on the internet, here we’ve pared it down to those deductions that are specific to the self-employed internet crowd.

Advertising Expenses

One of the great things about the internet is the ability to bring your product to a mass market at a relatively small overhead. Of course, there are still plenty of expenses necessary for effective online advertising campaigns. The good news is that all of these advertising expenses are valid deductions on your taxes.

State Sales Tax

If you happen to live in a state that has no income tax, this can be a real money saver. For the majority of us that do pay a state income tax, that deduction will typically be bigger. The IRS provides charts to calculate how much of a deduction you are able to claim, based on which state you live in. Any state sales taxes invoked on computer equipment and software can be claimed.

Out-of-pocket Charitable

While most people are well aware of the deduction that comes with donating to a charity, there are additional deductions that can be made on expenses related to charity. For example, if you bake and donate goods to a local church, you can deduct the cost of the materials and the 14 cents per mile plus parking and toll fees for transporting it there.

Student Loan Interest Paid by Your Parents

While it is commonly known that student loan interest is deductible, if you happen to be in the situation where your parents are paying off your student loans then you may be able to deduct the interest from your own taxes. You can not be a dependent of your parents, and they can’t claim the deduction either. If you’re one of the many people taking to the internet right now, this can be a great deduction for you.

Health Insurance Deduction

For 2010 only, a special deduction has been implemented for health insurance premiums that allow you to reduce your Self Employment Tax in addition to your income tax. Although this tax break has only been approved for the 2010 tax year, it might end up getting extended if approved by congress.

State Tax Payments from Last Year

Any of the previous year’s state taxes that you’ve had to pay out can be claimed as a deduction. Make sure to include these along with your regular quarterly payments.

Additional Bonus Depreciation

Both computers and software qualify for this type of deduction. This one is unlikely to apply to many of you, depending on whether or not you qualify for Section 179 of the tax code. If you don’t qualify for that, then this may be a good deduction for you. Realize, that this expense doesn’t give you a larger deduction overall, but allows you to make a bigger deduction up-front on equipment that depreciates over time, and then less of a deduction each subsequent year for 5 years.

Home Office Expenses

The big issue with this deduction is that you have to be able to show that your home office is used for business purposes only. If the IRS does decide to audit you, you will want to make sure that the computer you are using for your web enterprise along with furniture, printers, and other peripherals is clearly set apart from your other living arrangements. If your home office is legitimate, then you can also claim business expense as a percentage of your home that the office occupies. For example, if you have your home office set up in a corner of a room, measure out the dimensions that it is occupying, and calculate it as a percentage of the total square footage of your house or apartment. Claim that percentage of your rent or mortgage and utilities as a business expense.

Education and Training

If you subscribe to any web training services that are meant to improve your business, you can deduct these expenses from your taxes. For example, there are a lot of pay based SEO training programs out there as long as you are paying to learn and are not outsourcing work then you can claim this expense.

Software Expenses

This will be the last year that off-the-shelf software is going to be considered a valid business expense. If you paid to get specialized software for your internet enterprise, make sure to make this claim while you still can.

Bio: Alexis Bonari is currently a resident blogger at College Scholarships, where recently she’s been researching social working scholarships as well as student-specific scholarships. Whenever this WAHM gets some free time she enjoys doing yoga, cooking with the freshest organic in-season fare, and practicing the art of coupon clipping.