Posted in: Blog, Posted On: 19-03-2015, Posted By: stevenadmin

The Home Office Deduction

If you use your home for business, you may be able to deduct expenses for the business use of your home. If you qualify you can claim the deduction whether you rent or own your home. Here are some things you should know about the home office deduction.

1. Regular and Exclusive Use.  As a general rule, you must use a part of your home regularly and exclusively for business purposes. The part of your home used for business must also be:

• Your principal place of business, or
• A place where you meet clients or customers in the normal course of business, or
• A separate structure not attached to your home. Examples could include a garage or a studio.

2. The home office deduction includes certain costs that you paid for your home. For example, if you rent your home, part of the rent you paid may qualify. If you own your home, part of the mortgage interest, taxes and utilities you paid may qualify. The amount you can deduct usually depends on the percentage of your home used for business.

3. Self-Employed.  If you are self-employed you will use Form 8829, Expenses for Business Use of Your Home, to figure the amount you can deduct. Form 8829 will carry the deduction to your Schedule C, Profit or Loss From Business. This is important as it will help not only reduce your federal and state income taxes, but also lower your self-employment taxes associated with being self-employed.

4. If You Are An Employees.  If you are an employee, you must meet additional rules to claim the deduction. For example, your business use must also be for the convenience of your employer. If you qualify, you claim the deduction on Schedule A, Itemized Deductions.

Prior to claiming the home office deduction though we highly recommend you seek competent advice from a CPA, Enrolled Agent, or Tax Attorney.  For more information on the Home Office Deduction you can refer to IRS Publication 587, Business Use of Your Home.

Information for this post was obtained from IRS.GOV

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