Can You Claim a Home Office Deduction?

US Taxpayers and Home Office Deductions

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To explore this topic, I went right to the source – The IRS. I have to admit that they do post some very user friendly articles on their website – irs.gov – that can help US taxpayers follow the code. I am NOT a tax professional, and it is up to you to go right to the source.

Home offices can be deducted for:

One – Exclusively and regularly as either: your principal place of business, or as a place to meet or deal with patients, clients or customers in the normal course of your business. Where there is a separate structure not attached to your home, the regular and exclusive use does not need to be your principal place of business as long as the use is in connection with your trade or business.

Two – On a regular basis for certain storage use — such as storing inventory or product samples — as rental property, or as a home daycare facility.

So if you have a room that you use for your business (i.e. a home office) or you have a storage space you use for your business, you should be able to satisfy one of the criteria.

In general, you can dedcuct the percentage of your home expenses that is the equal to the percentage of your home you use. For example, if your home is 2200 square feet, and your home office is 220 feed, you would be able to use 10% as the amount of certain home expenses you can use to deduct.

Advantages of Building a Home Office

This plan has worked out for a couple of types of home business owners I know. Rather than renting office space or using space inside their homes, they built an outside structure on their property. They could take advantage of the home office deductions (read the IRS guidelines for clarification), and use their money to increase the asset value of their home because of the home office building!

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