Just a little info I thought I'd share
Direct Expenses:
Direct Expenses are expenses directly related to the conduct of
your business. This category would include office supplies; telephone
service; relevant newspaper and other subscriptions; cellular phones,
beepers and pagers; security alarm monitoring fees; employee
benefits; repairs and upkeep of rooms used exclusively for business
purposes, and professional dues. Direct expenses generally are 100%
deductible.
Indirect Expenses:
Rent, utilities, lawn care and general maintenance (such as
replacing a roof or repainting the exterior of a house), are examples of
Indirect Expenses. The amount of Indirect Expenses you can deduct
depends upon the ?Business Use Percentage? (BUP) of your home.
First of all, the ?P? in BUP applies to a Percentage of what? It
is the finished square footage of your home (i.e., it does not include
such areas as your garage, barn, land, or unfinished basement or attic).
Lets look at an example?
Lets say your home has a Living Room, a Kitchen, a Dining
Room, 3 Bedrooms, a Den and 2 Bathrooms. Now, lets say the
Living Room, Den, Dining Room and one Bedroom Office are all
used in your business ? the Dinning Room and 1 Bedroom exclusively (say 35% of your finished area square footage), and the Den and
Living Room regularly and primarily ? but not exclusively.
Let?s say that in square footage, those rooms make up 65% of
the ?finished? area of your home. Of course, you must have a
restroom if your customers and prospects visit your business, so one
of the bathrooms could also qualify. If so, your total potential usable
square footage is now up to about 70%.
You can include 100% of the square footage of your excusive
use rooms in your BUP, and a reasonable portion of the two rooms
used regularly and primarily for business in this hypothetical example.
Your Business Use Percentage (BUP) would then be between
35% and 70%. That means that ALL indirect expenses are calculated
at that rate. Obviously, you should be sure to consider all of your
business use in order that this percentage can be as high as possible
(pay attention to the upcoming examples for more information).
Imagine that! Legally deducting as much as the majority of
your home heating and cooling bill, your rent (yes, RENT, not just
mortgage interest!), your home maintenance and upkeep costs, even
your lawn care, snow removal, etc.! [ IRS Publication 587 ]
