For a Corporation (S-Corp) that I run out of my home, which expenses can the Corporation pay for?

According to the IRS...

Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:

• As your principal place of business, or
• As a place to meet or deal with patients, clients or customers in the normal course of your business, or
• In any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.

For certain storage use, rental use, or daycare-facility use, you are required to use the property regularly but not exclusively.

Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.

There are special rules for qualified daycare providers and for persons storing business inventory or product samples.

If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on line 30 of Form 1040 Schedule C, Profit or Loss From Business.

Different rules apply for claiming the home office deduction if you are an employee. For example, the regular and exclusive business use must be for the convenience of your employer.

For more information see IRS Publication 587, Business Use of Your Home, available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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You want some fun deductions? Well, 50% of the cost of a qualified business meal can be deducted (when you take a business prospect out to dinner). This can make taking clients out to dinner a lot more palatable (no pun intended).

The biggest savings of incorporating is not having to pay quarterly self employment taxes, so long as you pay yourself a "reasonable" salary, doing whatever you are doing. Although you will have to pay self-employment tax on that salary, anything earned over and above that will not be subject to self-employment taxation. What's reasonable? Hire a CPA.

Travel expenses can be deducted, generally speaking. And the Federal Government just magnanimously raised the per mile deduction by $0.01. Most relevant for your purposes are probably office supplies and software: but be careful. Software and computers are usually depreciated, or diminish in value over time, so you would be WELL ADVISED to hire a CPA to help you with tax planning.

CPAs love to do this, by the way, and the savings they can think up are sometimes amazing. A qualified tax professional can do wonders for your return. You're probably thinking this all sounds expensive... ...but guess what else is deductible? Fees for professional services for your business! (Though you may have to depreciate the deduction.)