To some, being a work-at-home mother would be the ultimate dream; waking up and never emerging from the warm comfort of your pajamas, going for lunch at absolutely any time, and simply being at home from sunup to sundown. However, there is one distinct similarity and to some, a disadvantage, between a work-at-home mother and the average, everyday office worker—taxes! In the blue collar world, all you had to do at tax time was wait around for your employer to mail you a W-2 form, but that all changes when your career moves from the office to your home. Not to worry though, there are a few distinct, yet beneficial tax credits that are worth learning about.
As most moms will tell you, the actual role of “mother,” is a job all on its own. When that is combined with legitimate work, it can sometimes prove to be a daunting task to juggle both. On the bright side though, there is a tax credit associated with being a mom that can offer some alleviation. In fact, should a mom’s income fall into the middle income bracket (or below), then she is most likely eligible for the credit that offers up $1,000 per child. This credit can be claimed the moment a baby emerges from the womb until the time the child reaches the ripe
young age of seventeen.
A member of the, let’s call it a, “regular workforce,” working the dreaded eight-hour day, is probably used to a retirement plan sponsored exclusively by their employer(s). However, the work-at-home mom is her own employer; in other words, she would be responsible for the retirement plan. This just means investing into an Individual Retirement
Account or IRA. Even better is the fact that income does not play a role as all deposits made into a traditional IRA are completely deductible. The Saver’s Tax Credit, on the
other hand, is another potentially-wonderful benefit available to work-at-home moms as long as their income meets certain criteria.
Now comes the fun part—the deductions for expenses. The only reason I say that is because there are so many different things that you may not expect to be deductions, but in reality actually are; as long as they are work-related that is. For example, that elaborate desktop computer, dedicated phone line, and adequate accounting software for your new home office are all deductible because they count as business expenses. Another good example would be that lavish lunch you took with your marketing friend who is supposed to collaborate with you to boost the exposure of your home business. Business-related expenses can encompass a diverse spectrum of purchases; therefore, the subject is definitely worth researching or consulting about with a tax specialist (which also may be tax-deductible).
When you consider the credits mentioned above, the idea of working-from-home becomes a little less scary, at least financially that is; juggling a career from home with the daily obligations of running a family, can lead to an immense amount of stress otherwise. So when the tax man comes knocking sometime at the beginning of the year, don’t hide behind the couch. No, instead arm yourself with these essential tax credits and have Mr. TaxMan catering to your every whim.