Home Office Internet Tax Deductions

If you are working out of a home office, you will want to take advantage of every home office deduction possible. If the Internet plays a vital role in your business, make sure that you account for the expense on your tax deductions. In order to determine how much to write off and how to complete the forms, there are several factors that need to be taken into consideration.

Determining Business Use

You will need to keep track of the amount of time the internet is used for business. If you are not in the habit of keeping a log, you can estimate the amount of time. Also, be sure to consider how much time other people in the household have regular access to the internet.

Calculating the Total

Review your statement and find the monthly cost for your internet service. Take this number and multiply it by the business usage percentage. Be sure to closely scrutinize your monthly statements because the cost may not be consistent from month to month. If the monthly costs remain the same, you can simply multiply the number by 12. If the amount differs however, you will need to calculate them separately and find the sum.

You will need to report your income on schedule C. If you use the internet solely for billing or contacting employees and clients, you may want to place it under Office expenses.

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