Does Your Home Office Qualify As a Tax Deduction?

April 1, 2010 by  Filed under: Taxes 

Running a home office is never an easy task, and many people are happy to find out that they can use their home office as a tax deduction. Often times, however, they are unsure of what requirements must be met in order to do this. This article will explain if and how your home office qualifies for a tax deduction.

In order to qualify for the deduction, you must be able to prove to the IRS that your office is used exclusively and regularly as your “principal place of business,” or as the place where you meet with patients, clients, or customers for business.

You must be able to show that you spend most of your working hours in your office and that most of your income comes from activities performed in the home office. If this is the case, be sure to have tax records of the work or activities performed in the home office and that you are aware of how much time you have worked in the office. Offices that are not a part of one’s home, but that are detached in some way are considered “exclusive” and more readily qualify for the deduction.

There are also rules about what exactly is tax deductible. You may deduct real estate tax, utilities, depreciation, mortgage interest, and general operating expenses that relate to your home office, but you cannot deduct all of these expenses. Instead, you are required to allocate the expenses on the business and personal sections of the tax forms. If you require help in doing this, seek out the advice of a professional.

Also, be sure to never provide false or misleading information on a tax return. You may think it is saving you money, but, in the long run, doing so can get you into both legal and financial trouble.

R&G Brenner are a leading income tax and financial consulting advisors.If you have any questions about your current tax returns, or would like them to take care of it for you, feel free to visit R&G Brenner

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