Thursday, October 2, 2008

Home Office Tax Deductions

Home office deductions are a hot and questionable topic. Research and accurate record keeping are imperative aspects to be considered. At this time, due to the growing number of individuals who are working from home and telecommuting, it is becoming the “norm.” If considering taking home office deductions pay close attention to requirements and take advice from professionals.

Two Basic Requirements

Basic rules when taking home office deductions are; 1st requirement, the location must be used regularly and exclusively for conducting business. The 2nd requirement is the home is used as the principle place of business. The space being used for business cannot be used for personal reasons or any other, just exclusively use for business. If the computer, in the office area that is being used for administrative services, is also used for paying personal bills online from that computer or the office area is being used for relaxation or any other activity besides business, it does not qualify under the two requirements for being accepted use of the area and being able to take deductions for having an office in the home. IRS-Home Office Deductions Basic Requirements

Own or Rent

Home office deductions can be taken whether or not you own or rent. If you use a room or a portion of a room, the calculation is to figure out what percentage of square feet the portion being used is in relation to the entire square footage of the house or apartment. If you own a home, a percentage of either mortgage interest or a portion of depreciation; (if the home is older than 39 years), can be taken as a deduction. There is a section on the IRS website that details the requirements and forms that should be submitted. Home office deduction calculators Home Office Deduction Calc are very helpful in figuring out what you will qualify for. IRS-Home Office Deductions Steps to take in order to keep records and information organized

1.) Save all receipts 2.) Keep accurate and timely records 3.) Pictures of the business space in your tax records 4.) Record all appointments Turbo Tax

5.) Seek a tax professional’s help to file an accurate and valid tax return. Find an Enrolled Agent

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