Barbara Weltman of Fresh Inc says, “here are some important items to keep in mind in order to meet the strict criteria for home office deductions:”

  • You must be profitable to benefit from a home office deduction.
  • Your annual write-off cannot exceed income from the business, though unused deductions can be carried forward and used in a future year.
  • For more information about claiming a home office deduction, see IRS Publication 587, Business Use of Your Home, at www.irs.gov.

Regular and exclusive use:
“Even if you meet the first threshold, you must also show that you use a portion of your home regularly and exclusively for business.”

What is deductable:
“For example, if you use 10% of your living space for work, you can deduct 10% of your utilities, insurance, rent (if you lease) or mortgage interest and real estate taxes (if you own your home).”

“Painting the office space and the cost of cleaning, security monitoring and pest control can be listed as deductions.”

“Establishing a home office creates a secondary benefit: The ability to deduct travel expenses from home to business locations and back again.”

Other good resources include:

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