I have a home business- need tax advise what do i do???

You could write off a portion of your home for business, but this is the #1 red flag for an IRS audit for self employed people, so be sure that EVERYTHING you are deducting for this purpose has proof and receipts to justify this deduction. The room has to be used SOLELY for your business. I'm not an expert but we ran a contracting business through our home for over 10 years. We never used the home deduction just because it creates a nightmare when you sell your house (tax recapture and all that junk) that we didn't want to deal with & we had enough other expenses that we didn't need the hle of that one. Of course, since you rent, it's different. I'm not sure if this is legal (CHECK W/THE IRS FIRST) but you might be able to write out a separate check for that portion of your home (convert your square footage into a percentage) and use that as a rent expense for your business instead? Again - doublecheck. Basically, if all your payments are coming in as cash, and no one is claiming you as a deduction (sending you a 1099 form at the end of the year) then you really don't have to report it as income (((dodging eggs from IRS))). If your income & expenses don't justify all the headache of filing a schedule C, you may want to reconsider legitimizing it unless you plan to expand into a store front or purchase a major amount of equipment. You could show a loss this way and reduce the amount of tax you would normally pay between this income and your husband's income, but that can only be done a couple of times before flagging an audit. Not sure what state you're in, but in CA in order to sell products you have to collect sales tax and report to the state every quarter - it's a major pain!