Confused about self-employment

[blaznivy]

I'm a graphic designer who does freelancing, but I also work as an employee for another business full time. Since I do my freelancing in my home office, I understand a percentage of my utilities is deducted and this percentage is reflected by the office space sq f vs the whole house sq ft.

1. Since I use my cell phone mostly (more than 70%) for self employed work, does this go under the above deductible home/office utilities when doing my income tax? Where would it go if not?

2. Is there a maximum value or percentage of utilities deducted in a home office that can go against income made?

Much thanks!

Aaron

[stardancer]

You can write off a % of your cell phone as a business expense; be prepared to prove you used it for business calls

The amount of utilities you can write off depends on the % of home use; example if you used 1 room out of 5 as an office for business use, then the eligible amount would be 1/5th of the expenses. If you show a loss of income/expenses then the use of home office expenses cannot be used to increase the loss, but the amount can be carried forward to a year in which you show a profit.

Note: the 'home office' must be a room dedicated to such work; it cannot be a desk in the corner of your living room.

http://www.cra-arc.gc.ca/E/pbg/tf/t2...DME.html?=slnk

[Cal]

I am sure that you will find a quick trip to the accountant to be worth the money spent to learn the tax treatments of being self employed.

[Financial Cents]

I recall for any home business/self-employed business at home, you need to calculate expenses as follows:

% home used for home business x time spent for home business x expenses for year = eligible deduction.

For example:

150 sq. feet used for home business; out of a 1500 sq. foot home.
Spend on average 4 hours per day for home business; out of 24 hours per day; 7 days a week.
Utility or phone bill is $50 per month; for 12 months in 2011 calendar year = $600.

Calculation is:

150/1500 x 4/24 x $600 = $10.

$10 can be expensed.

This formula comes from the T4002 CRA tax guide, pages 28 & 29.
http://www.cra-arc.gc.ca/E/pub/tg/t4002/

[marina628]

Financial cents is correct ,it is based on percentage of the house you use for business and you can also deduct that % of mortgage interest ,insurance and taxes as well.