Home Office Deductions

Tax Tip: Home Office Deductions

More and more business owners are working from home.

Grab a laptop and off you go. No rent to pay. No traffic. A short commute from the kitchen to the home office.

What could be better? A Tax Deduction. That’s what could be better.  

Normally personal expenses like the home telephone, the home computer, the home utilities and more cannot be used to lower your income and your taxes. However, when you work for yourself you can take advantage of deductions for a home office that you wouldn’t normally be able to take. What a deal!

This article uncovers the secrets of the home office deduction for you to take advantage of..

Home office deductions can be very beneficial for a business owner.

The key to the home office deduction is that you are reducing business income which can be subject to double taxation. In the case of the home office, if you use part of the home say 200 square feet and your total home space is 2,000 square feet, you will be able to take a 10% deduction for mortgage, property taxes, utilities and other expenses right off your business income which can save you a fair amount of money.

For sole proprietors, this can mean thousands of dollars in tax savings.

The home office deduction has a couple of key rules.

Home Office Deduction Rule #1:  

First, the home office must be used regularly for a trade or business. That means you want to log in time working in your home office on a regular basis, especially if you have a second place where you conduct business.

Home Office Deduction Rule #2:  

Second, the home office must be used as a place which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business.

If you are an employee of a business and your employer requires you to have a home office for the employer’s convenience, then an employee also can take a home office deduction.

For many home-based businesses such as those selling health care or skin products, internet business and others, the requirement of meeting customers or clients is pretty straightforward.

There is no question that telephone calls made, appointments set and even meetings with prospective customers can be established and proven to justify the home office deduction.

However, in cases where a person has a regular place of business outside of the home, it will be rare for the home office deduction to be permitted.

The home office deduction is an IRS favorite of mine for business owners.

It can be perilous or it can be a real treasure. Contact us with your questions we’re glad to assist you!

Are You Taking All of the Deductions Available for Your Business?

Take action by creating a long range plan for your business that will help you keep more money in your pocket rather than the government’s.

Set up a meeting with one of our tax professionals and discuss ways to position your company for success by giving us a call at (760) 579-0079.

Or you can contact us >>HERE<<

Unless your situation is very straightforward we are well positioned to find ways that will more than compensate you for the time and cost you spend with us.