Posts from February, 2010

Many people who received buyouts and severance packages last year used the money to start home-based businesses. Now, they’ll want to take tax deductions for their home offices.

The deduction for using part of your home for business purposes – popularly known as the home office deduction – used to be something scary. It was widely believed that taking the deduction would automatically land you an IRS audit. Tax advisers say that’s no longer the case, especially since there are so many businesses being run out of homes, garages and apartments. But if you don’t follow the rules and try to take too big a deduction, you could still draw the attention of IRS employees.

To read more of this Washington Post article click here.

Hobbies provide a great way to relax from the daily grind. For many people, they also offer a way to make extra spending money.

Be aware, however, when your hobby produces income, you owe tax on it.

You can reduce your taxable hobby income by deducting your hobby expenses, but this tax break is limited.

Allowable hobby deductions
You can only deduct expenses up to the amount of money you make on the hobby. Even then, hobby expenses, along with other miscellaneous expenses you itemize on Schedule A, must come to more than 2 percent of your adjusted gross income before you can deduct them.

To read more of this Bankrate.com article read here.