Home Office Deduction

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 ?
With more and more people working remotely, a common question clients asked this past tax season was whether they are eligible to take the home office deduction. This is also referred to as business use of home.
Other questions address the income and deductions, including methods used for auto expenses and the home office deduction. A profitable Schedule C business may also be a good place to address self-employment tax questions.
A partial list of those who are not eligible for tax services includes individuals who receive income from rental property; have Form 1099-A (Acquisition or Abandonment of Secured Property); Form 1099-C (Cancellation of Debt) for discharged debt other than credit card (Box 4); taxpayers wishing to claim the Home Office Deduction; taxpayers whose business produces a loss.
* Home office deduction. If the home is the principal place of business, or there is no other fixed location for the person and space in the home is used to do administrative work (e.g., keep books and records, do research, schedule appointments), then the worker may be eligible for a home office deduction.
The Internal Revenue Service today reminded small business owners who work from a home office that there are two options for claiming the Home Office Deduction. The Home Office Deduction is often overlooked by small business owners.
Chapters walk the reader through how to deduct operating expenses, the basics of depreciation, the home office deduction, hiring help, casualty and theft losses, necessary record-keeping systems, and much more.
If you're freelance or self-employed and work from home, the home office deduction could save you some money on your taxes.
The home office deduction under the actual or simplified method can't be used to create a net loss for the business.
You may be able to claim a home office deduction, as long as you use part of your home exclusively for conducting business.
Benefits include the potential ability to expense the cost of equipment purchases, business travel, certain educational expenses and claiming a home office deduction for a home-based business franchise.
Congress has relaxed the rules, so a home office deduction is no longer a red flag, he says.
Among the other changes for 2013, taxpayers who work at home will now have a simplified option for taking a home office deduction.