What is the home office deduction?
The IRS provides its definition of a home-office deduction in this downloadable PDF document, Publication 587,”Business Use Of Your Home: http://www.irs.gov/pub/irs-pdf/p587.pdf This is not just one deduction; it is the sum of many smaller deductions. These are summarized in Form 8829 http://www.irs.gov/pub/irs-pdf/f8829.pdf and will be discussed in more detail later in this report. Our discussion here applies to the following main tax entities that may qualify to deduct home-office expenses: Individuals as sole proprietors Trusts Estates Partnerships Sub-chapter S Corporations (but not to regular corporations) Daycare facilities Employees of a company. What makes any of these eligible for the home-office deduction? The IRS says that your use of the business part of your home must be: Exclusively for business Regularly used for your business Must be only for your trade or business The business part of your home must also be ONE of these: Your principal place of business, A place where
The more people work at home, the most often they try to claim a home office deduction on their income taxes. The home office deduction allows taxpayers who work at home and maintain a home office to get a significant reduction in income taxes, as long as certain standards are met. What are the criteria for the deduction? There are three primary criteria you must meet to take the home office deduction. For someone operating a work at home business, the first one is the hardest to meet. The first criteria that the IRS uses to determine if you are eligible for the home office deduction is the question of how the space is used. To qualify, you must use your home office exclusively for your home business. If you use a corner of the family room for the home office, this can be hard to prove. When the IRS talks about exclusive use, it means exclusive and regular use. That is, the only activities that should take place in the space should be those related to your business. You should only con
In the United States, a home office deduction is a tax deduction that some taxpayers may be eligible to claim in order to reduce their taxable income. If a taxpayer uses a portion of their home exclusively for business purposes, they may be eligible to claim a home office deduction. Eligibility for this income tax deduction is not reserved for only the self-employed, but may also be extended to the employees of others under certain conditions. The defining criteria for home office deduction eligibility is that the part of the home used to calculate the deduction must be used both regularly and exclusively as the taxpayer’s principal place of conducting business. It may also be defined as the portion of the home the taxpayer uses to meet with clients, patients, or customers in the normal course of conducting a trade or business. The dollar amount that can be deducted from taxable income for a home office is dependent on the percentage of the home used for business. If a separate structu
