[terry1156]

The key is that you have to have someone bringing in money. If your husband works and makes $30,000 and you start a home business and you lose money, you can deduct your losses from the $30,000 income. Where people really save is deducting a % of their rent, utilities, etc. The reason this is so profitable even when you lose money is because even if you didn't have a home business, you would probably spend about the same amount on these things.

Here's an example. Your husband has $30,000 in earned income. Your rent is $750 a month and all your utlities come to another $250 a month. You don't have a home business, so your are taxed on $30,000.

Your husband has $30,000 in earned income. You have a home business and have set aside 20% of your home for doing it. Your rent is $750 a month and all your utlities come to another $250 a month. You don't make any money although your tried, but since you tried you can deduct $150 for rent and $50 for utilites each month as part of the business. So you end up paying taxes on $27,600.

You would pay rent and utilities if you had the home business or not so you get savings Since there are a lot more things you can deduct other than rent and utilities, you can save a large amount even if the home business doesn't make any money.