Home Business Tax Deductions in Arkansas
- State and federal income tax returns allow operators of home businesses to deduct business expenses on their tax returns, as long as those expenses are ordinary and necessary to the business. An ordinary expense is one that is deemed both accepted and common for the type of business you operate, and a necessary expense is helpful and appropriate for your business even if it's not critical.
- The home office deduction allows you to deduct a percentage of the mortgage interest, upkeep costs and utilities for your home. Home business owners can take tax deductions for having a home office as long as the home office meets specific criteria. If your home office is a space devoted to exclusive use for your business and that space is the primary place you conduct business, it satisfies the home office tax deduction criteria. A website designer who has a home office in a spare bedroom, for example, can claim that as a tax deduction.
- Home businesses are allowed to deduct travel expenses if they're related to their business, and the business use of a vehicle. If you take a trip that is business related, you can usually deduct all expenses related to that trip including getting to the airport, paying for the hotel and paying for cab fare. You can only deduct 50 percent of meals purchased during business trips, however. If you use your own vehicle for business purposes, you can deduct a specific amount per mile driven or you can choose to deduct a portion of the maintenance and upkeep costs for the year.
- Arkansas has a number of business incentives and tax credits that your home business may be eligible for. The majority of these credits are geared toward large corporations but several focus on science, technology and information systems as well as research and economic development. So whether your home business may qualify depends on the type of business you operate.
