Jeff Haywood, CPA

« Is Your Child’s Investment Income Supposed to be Taxed at YOUR Tax Rate?

Important IRS Tax Tips: Health Insurance Tax Breaks for the Self Employed »

6 Things the IRS Wants You To Know About the Home Office Deduction

March 16th, 2011 | Author: admin

6 Things the IRS Wants You to Know About the Home Office Deduction:

Mr. CPA, I want to deduct the cost of my office at home. Actually I work throughout the entire house so I feel I should be able to deduct all my home expenses. Can I do that? To answer your question take a look at this list released by the IRS:

Work From Home? Consider the Home Office Deduction

Tax Tip 2011-53, March 16, 2011

Whether you are self-employed or an employee, if you use a portion of your home for business, you may be able to take a home office deduction. Here are six things the IRS wants you to know about the Home Office deduction

1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:

as your principal place of business, or
as a place to meet or deal with patients, clients or customers in the normal course of your business, or
in any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.

2. For certain storage use, rental use, or daycare-facility use, you are required to use the property regularly but not exclusively.

3. Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.

4. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.

5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on line 30 of Form 1040 Schedule C, Profit or Loss From Business.

6. If you are an employee, additional rules apply for claiming the home office deduction. For example, the regular and exclusive business use must be for the convenience of your employer.

For more information see IRS Publication 587, Business Use of Your Home, available at http://www.IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

Publication 587, Business Use of Your Home (PDF 214K)
Form 8829, Expenses for Business Use of Your Home (PDF 64K)
Form 8829 Instructions (PDF 29K)
Schedule C, Profit or Loss from Business (PDF 111K)
Schedule A, Itemized Deductions (PDF)

So do you use your entire home exclusively as your office? Then no you do not get to deduct all of your home expenses. However, if you use your office exclusively and regularly and meet the other requirements listed above you may be able to deduct the portion of your home expenses that apply to your office. The deduction is calculated using the square footage of your office relative to the total for your home. Also, if you are trying to deduct Home Office Expenses for your business your deduction may be limited if your business shows a loss. For more information on a Home Office Deduction see IRS publication 587.

To have an experienced CPA help you prepare your tax returns and help you reach your goals contact me at the phone number below.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

Also, I am available for tax planning and discussions about business, retirement planning and life goals.

For more US income tax content see the following links:

10 Things to Know About the Child and Dependent Care Credit
10 Important Facts About Capital Gains and Loses
IRS: Beware of Tax Scams
IRS Top Ten: Mortgage Debt Forgiveness
IRS Top Ten: IRA Contributions
US Income Tax Help for Expatriates
4 Credits That Can Pay You at Tax Time
What Business Deductions Can I Take as an Employee? IRS Tax Tips.
Was This Year a Bad Year? We may be able to get you a refund of your taxes paid in prior years.
6 IRS Tax Tips for Self-Employed Individuals
Important IRS Tax Tips: Health Insurance Tax Breaks for the Self-Employed
6 Things the IRS Wants You to Know About the Home Office Deduction
Is Your Child’s Investment Income Supposed to be Taxed at Your Tax Rate?
IRS Notice – Don’t Panic – Call Me
Who Can I Claim As A Dependent?
Which Filing Status Should I Use?
Do I Have To File A Tax Return For 2010?
6 Things You Should Know About Business Expenses – What You Can Deduct
Top Four Reasons Clients Hire Me To Prepare Their Tax Returns – Individual and Business
Instant Convenient Access To Your Tax Returns and Documents
How To Avoid the Social Security Penalty and Does Warren Buffett Get Penalized??
5000 Birds Fall From the Sky – Casualty Losses
Are You Required to Report Foreign Banks and Financial Accounts?
2010: “A Last Minute Checklist”
Energy Credits
ROTH IRAs
Traditional IRAs
Year-End Tax Planning Tips
Education Credits-American Opportunity Credit
ROTH IRA Conversion

As always keep in mind that the content provide on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.