Friday, December 19, 2008

Tax Tip - Home Office Deductions

Do you do most of your business out of your home? If so, you may be allowed to deduct for home office expenses on your federal income tax return. However, there are some limitations.

There are some basic requirements for you to be able to take the home office deduction. To be able to claim a deduction for the part of a home, you must use that part of the home:
  • exclusively and regularly as your principal place of business
  • on a regular basis of storage use for inventory or product samples
If these conditions apply, the amount of the deduction depends on the percentage of the home that is used for business. The deduction can not be more than the net income.

Common methods to calculate the business percentage are:
  • Divide the area of the home used for business by the total are of the home, or
  • Divide the number of rooms used for business by the total number of rooms in the home if ll rooms in the home are about the same size.
Expenses that you may be able to deduct for business use of the home may include the business portion of:
  • real estate taxes
  • mortgage interest
  • rent
  • insurance
  • utilities
  • insurance
  • depreciation
  • painting and repairs
You are not able to deduct expenses for any part of the year during which there is no business use of the home.

Personal expenses are not business expenses.

This is merely a general outline. For more information and to make sure that you qualify, you can download Publication 587, Business Use of Your Home from the IRS website.

Christie Pegoda
SD Virtual Assistant
phone 501-205-4083
fax 888-243-0865

No comments:

Post a Comment