The more you claim on your taxes, the less money you owe to the IRS. It’s important to make sure that you claim everything you’re entitled for in order to save as much money as you can on your taxes. This means you should consider looking into whether you can claim your personal work space as a home office deduction.
To qualify as a business deduction, you must use your home as your principal place of business or as a place where the taxpayer meets customers, clients, or patients in the normal course of business, regularly and exclusively. The amount you can deduct is limited to the percentage use of your home office.
Breaking Down the Numbers
To calculate the percentage use of your home office, you would need the total square footage of your home and square footage of the space designated for your home office. Then divide the area that is used for business by the total area of your home.
When deducting expenses for the business use of your home, you need to separate the expenses of operating your home between personal and business use. Examples of expenses are real estate taxes, deductible mortgage interests, insurance, repairs and maintenance, security systems, utilities, etc. Nonetheless, going about a home office deduction is far simpler than it used to be.
Home Office Deductions Vary By Employment Type
If you are self employed, you would need to use IRS form 8829, Expenses for Business Use of Your Home, to report the deductions. These deductions would then be able to reduce any self employment tax, if applicable.
If you are an employee, you would report your deductions on IRS Form Schedule A, subject to the 2% of your Adjusted Gross Income limitation. The home office deduction for employees must be for the convenience of the employer in addition to having the office be used regularly and exclusively for job related activities.
See a Professional
Sometimes, going through these forms can be tricky. If you have any questions about the process, don’t hesitate to call Larry L. Bertsch at (702) 471-7223. Having a professional CPA at your side during tax season can help you eliminate the stress and obtain the most in deductions to save you money.