Misconceptions about taxes can easily get you into trouble with the IRS. Everyone should be reminded to rid themselves of preconceived notions regarding tax and possible root causes of tax problems and to actually be well-informed regarding them. If nothing else but to avoid getting into IRS trouble, getting well acquainted with common misconceptions is worth the effort-especially misconceptions regarding the prolific online business.

Online Business Vs Regular Business

Many people have this image of a home business and it is usually far from the regular business visage. Unfortunately, most of the time the IRS doesn\’t see it that way. You can easily get tax problems thinking your online business must have some special benefits and applicable deductions from taxes, much like how it has afforded you the privilege of firing your own boss and taking control over your income.

The IRS categorizes home businesses with other businesses; they don\’t merit any special mention. You\’ll still need to file tax forms and other documents like you did before your business came into being. And don\’t think that because your income is generated online there are times you can deliberately leave out some details regarding it. This is the worst and most common notion attached with the misconception of online businesses being different from regular ones. You still need to indicate every cent of your income regardless of where it came from.

The Transition from Regular Day Job to Home Business

Most people associate home businesses with freedom and a lifestyle free from the restricting pressures of a regular nine-to-five. That may be true, but whether in the real plane or the virtual one, any business will still have to answer to the IRS. Many new entrepreneurs would think everything\’s fine and continue filing their taxes like they didn\’t transition into an online business. There are many inherent properties of a home business that could easily raise red flags at the IRS. For instance, if you went from a regular day job to an online business and suddenly earned a lot more than when you did before, the difference in income between your current tax returns and your previous ones can be grounds for an immediate audit. Also, it\’s in the nature of Internet marketing businesses, among others, to have fluctuating income initially. Too much fluctuation can cause IRS computers to believe they\’re in fact anomalies and can, again, be grounds for an audit on your taxes.

The Home Office Tax Deduction

Perhaps the first misconception that many new online entrepreneurs are quick to try and take advantage of is the applicable deductions for a home business. By law, a home office is eligible to a maximum of 20% deductions on home expenses related to business. A home office makes you eligible for a maximum of 20% deductions on your taxes on virtually any expenditure at home-be it rent, utility bills, or whatever-so long as you dedicate a part of your house for the sole purpose of business. Most would claim for 100% tax deductions when the maximum is only 20%, and some would even stipulate that they have an actual home office when in fact they just have a PC in the living room or in their bedrooms. This is an open invitation to IRS problems, so veer away from such misconstrued notions and be informed.

Seomul Evans is SEO consultant specializing in Attorney Marketing. Visit the sites to learn more about DFW Tax Attorney and Income Tax Attorney Fort Worth.

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Author Bio: Seomul Evans is SEO consultant specializing in Attorney Marketing. Visit the sites to learn more about DFW Tax Attorney and Income Tax Attorney Fort Worth.

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