Maximize Your Tax Deductions Using 0 article

Maximize Your Tax Deductions Using The IRS's "Two Business Location Rule"

Maximize Your Tax Deductions Using The IRS's "Two Business
Location Rule"

by Collin Almeida

If you're like most Americans, your automobile is one of
your biggest expenses.

Maximize Your Tax Deductions Using The IRS's "Two Business
Location Rule"

by Collin Almeida

If you're like most Americans, your automobile is one of
your biggest expenses. Gas, insurance, maintenance, and
licensing all add up to a generous portion of the average
person's income, not to mention the actual cost of buying
or leasing a vehicle. Wouldn't it be wonderful if you could
write-off a considerable amount of these expenses on your
taxes? Well, if you own a home-based business, you can.
All it requires is some simple documentation and you can
start claiming thousands of dollars in automobile-related
tax deductions.

How many times have you gone to pick up office supplies
while you were out buying groceries? When was the last time
you ran to the bank to make a quick business deposit on the
way to picking up your children at school? Chances are you
do these things all the time, but you probably never
realized that those miles could be claimed on your taxes.
As far as the IRS is concerned, you can claim the miles as
a business expenses if the primary purpose for your trip was
company-related. Think of the plethora of possibilities:
making copies at the mall while Christmas shopping, buying
stamps on your way to pick up dinner, or comparing prices
on computers while you shop for a new DVD player. All of
these trips and plenty more could be legally claimed as tax
deductions.

In addition to errands, you can also claim the miles you
rack up while commuting to and from a regular job. If you
have a home-based business, your commute mileage can be
deducted under the IRS's "Two Business Locations Rule."
According to this rule, you can claim mileage accumulated
driving - "from one business location to a second business
location". Here's how it works:

Before going to your regular job, handle a business-
related task for your home-based company, such as phoning a
client, checking e-mail, or balancing the books.

On your way to your regular job, make a "necessary
business stop." For example, you might run by the bank,
the copy center, or the post office.

Drive to your regular job.

Reverse the procedure at the end of the day.

As long as you follow all four steps daily, you can claim
all those commuter miles.

While there's no trick involved in claiming these
deductions, it does require additional effort on your part.
First, you must rearrange your schedule in order to
incorporate the business stops. While this may seem
annoying at first, most home-based business owners find
that the reorganization boosts their overall efficiency.
For example, instead of running a dozen separate errands
during a week, those can be combined into only a few,
slightly longer trips, which will save you time, energy,
and probably gas.

Of course there's the second part: the record keeping. In
order to audit-proof these deductions, you will need to
keep a vehicle-use log. The log can be a simple notebook
with columns for destination, trip's purpose, and odometer
reading. You must complete the log for every car trip you
make, not just the business-related ones. It may seem like
a lot of effort, but each entry would take less than a
minute to record and after a week filling in the columns
would become as much a habit as fastening your seatbelt.

You're probably wondering if the deduction is actually
worth the inconvenience of rearranging your schedule and
keeping a log of all your car trips. Decide for yourself.
If your round-trip daily commute is only 10 miles, you can
earn a deduction of $3.45 every working day, almost $20 a
week, over $1000 for an entire year and that amount does
not include mileage for business-related errands. Basically
not taking the time and effort to claim this deduction is
like throwing $10 out of your car window every 30 miles!

Besides writing off your car's accumulated mileage at tax
time, you can also claim other automobile-related expenses.
For example, you can claim gasoline, insurance, parking
fees, and tollbooth expenses as additional deductions. Just
keep all receipts and documentation in order to protect
yourself in case of an audit.

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Discover little known but highly lucrative tax advantages
you can legally claim as a home based business owner by
visiting http://www.homebusinesstaxsecrets.com Get the
FREE REPORT: "5 Hidden Tax Dangers..." that shows you how
to save $1000's in taxes and avoid costly audits.

About the Author

Discover little known but highly lucrative tax advantages
you can legally claim as a home based business owner by
visiting http://www.homebusinesstaxsecrets.com Get the
FREE REPORT: "5 Hidden Tax Dangers..." that shows you how
to save $1000's in taxes and avoid costly audits.