One of the really nice benefits of “owning your own business” or practicing massage therapy from home is the home office deduction that you can take when filing your taxes to save a significant amount of money.
Many massage therapists work from home in some capacity. Some therapists operate a full time business from home, whereas others have a small side business going where their clients visit them in their homes where they perform massage.
If you are considering working out of your home at some point in your career, whether now or later, remember that you can save a good amount on your taxes if you claim the “home office deduction”.
In a nutshell, the Internal Revenue Service (IRS), also known as the tax people, allows business owners to deduct a portion of their home expenses that can be attributed to business. What does this mean for a massage therapist?
If you are going to work from home, you likely have a room or an area dedicated to where you will be giving massages. You likely have a massage table that is set up there and all your other work related stuff. The government allows you to claim this area as a deduction on your taxes.
For example, if your house, condo or apartment is 2,000 square feet and you use one room which is 500 square feet for work (massage), you are allowed to deduct 25% of your rent or mortgage as a “business expense”.
500 is 25% of 2,000. Therefore you are allowed to deduct 25% of your rent payment as a business expense. If you pay $1,500 in rent or have a mortgage of that amount, you can deduct 25% of that, or $375 as a business expense. This will significantly reduce the taxes you owe to Uncle Sam.
Not only can you deduct rent, but you can also deduct electricity, water, heat, house cleaning expense and all other household related expenses you can think of that impact the 25% of space you use for business. So let’s just say your utilities and house cleaning and care expenses add up to $500 a month, you can deduce 25% of that as well which is $125. That’s another bit of savings on your taxes.
The idea of this article is not to give you every single tax deduction you are entitled to (for example, the cost of your continuing education is fully deductible) and turn you into a tax expert, but to make you aware of the benefits available to you as a massage therapist working from home. Education and awareness is the key. Make sure your CPA/tax accountant claims this deduction. If you notice they have not, ask them why (they better have a good explanation).
If you file your taxes on your own, go through a step by step program like Turbo Tax which will walk you through all the deductions you are entitled to. This will ensure you don’t miss out on money. Do not pay the IRS more taxes than what you need to.