How to Deduct Utilities on agenda C, Line 25

Can I Deduct Property Taxes - How to Deduct Utilities on agenda C, Line 25

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If you are a Sole Proprietor and are finding for all the deductions the tax law allows you to take, make sure you properly deduct utilities on agenda C. This narrative will give you the details on the do's and don'ts of utility price deductions.

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Can I Deduct Property Taxes

What you can deduct. Let's start with the good news. If you have a business location that is isolate from your personal residence, such as an office, a store, a warehouse, or other commercial construction (regardless of either you own or rent this structure), you are entitled to fully deduct all utilities expenses. This would comprise the obvious: electricity, gas, water, sewer service, waste disposal and telephone service. All these expenses should be reported on agenda C, Line 25.

What you cannot deduct. Now comes the bad news. Sole Proprietors who work out of their home often assume they can take a deduction for their home phone line. This is especially true of those who qualify for the home office deduction. I'm sorry to disappoint you, but if you only have one line coming into your home, you can never deduct the base rate for the first line into your residence, regardless of how much you use that line for business purposes.

Here's what you can deduct related to the business use of your home phone: 1. The cost of any added lines into your home that are used exclusively for business are deductible. For example, if you have a second line that is dedicated to business use, you can write off the price related with that line. an additional one example would be a second line that is used only as a business fax line; 2. Any long length business charges are deductible, regardless of how many lines you have coming into your home. It is requisite to specifically identify those business calls on your monthly phone bills and add them up to determine the actual expense. You can even deduct business long length calls on the first line.

Another important mistake you want to avoid is reporting your other home utility expenses (such as electricity, gas, water, etc.) on agenda C, Line 25. If you qualify for the home office deduction, you are entitled to deduct the business use ration of those home utilities, but you must narrative those expenses on Form 8829 first. The total of all your home office expenses is then transferred from Form 8829 to agenda C, Line 30.

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