Home Office Deduction

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Home Office Deduction

A reduction in one's taxable income for the expenses of maintaining a home office. For example, a self-employed person may deduct the costs of office supplies, depreciation on one's computer and similar expenses. Likewise, one may deduct a portion of one's rent or mortgage for an office space used exclusively for business purposes. However, the amount deducted must be proportionate to the office's size relative to the home. Employees who work from home are eligible for the same deduction under the same restrictions.
References in periodicals archive ?
Some taxpayers may endeavor to shift property taxes to business entities where the restrictions do not apply, and other might consider claiming home office deductions to obtain more deductions.
These audits might be more far-reaching, or the examiner might want to check on something specific, such as home office deductions you've claimed.
213, an accountant who provided bookkeeping and tax return preparation services was not entitled to home office deductions she split between her two residences.
3 million people claimed nearly $10 billion in home office deductions using Schedule C.
KFRN-AM in Long Beach interviewed Melody Thornton regarding home office deductions Aug.
All these changes mean practitioners and taxpayers would benefit from refamiliarizing themselves with the rules that apply to home office deductions.
From handling vehicles and travel, meals, and inventory to claiming business losses and legitimate home office deductions, these important guides explain all the basics.
Chapters cover landlard tax classifications, deduction of operating expenses, repairs, depreciation, interest, start-up expenses, home office deductions, car and local transportation expenses, travel expenses, hiring help, casualty and theft losses, additional deductions, vacation homes, deduction of rental losses, record keeping and accounting, Schedule E, and claiming deductions for prior years.
Even though the government loosened restrictions on home office deductions in 1999, make sure you can substantiate that business area of your home if asked.
Notable regulatory barriers include complex IRS rules on home office deductions and the complicated test for determining independent contractor status.
For small businesses especially, there are a number of applicable deductions which many tax preparers often miss from home office deductions to self-employed health insurance to personal assets converted to business use (see Top Ten Most Often Missed Business Tax Deductions).