Home Office Tax Deductions

[mandy]

If you're going to claim the home-office deduction, make sure you've mastered the fine print. "People shouldn't refrain from claiming it out of fear of an audit if they're entitled to it," says Mark Luscombe, principal analyst at CCH, a Wolters Kluwer business that provides tax and other business information and software.

Small-business owners increasingly are using their home as a primary place for business, Ms. Olson's report says. It cites government data showing the number of home offices jumped about 20% between 1999 and 2005. The report also estimates that slightly over half of small business are home-based but says "many" business owners don't take the home-office deduction. For example, the IRS report says that of the nearly 20 million filers who sent in Schedule C (for sole proprietors) for 2003, only about 2.7 million claimed the deduction.

As Ms. Olson points out, the rules are tricky. To qualify for the deduction, you typically have to use your home office regularly and exclusively as a principal place of business or as a place to meet or deal with patients, clients or customers in the normal course of work. (However, this isn't always true. For example, you don't have to pass the exclusive-use test if you use part of your home as a day-care facility, or if you use it to store inventory or product samples.) If the office is in a separate structure not attached to your home, you have to use it in connection with your trade or business...

full article: http://online.wsj.com/article/SB120043915626692441.html

and:

If you work from home, you may be wondering if you can deduct costs related to your home office — a part of your mortgage payment or rent, for example. But unfortunately the U.S. tax law in this area doesn’t recognize the work-life blend that most home workers practice. If you mix business and personal activities in your home office, you can’t take the deduction...

full article: http://webworkerdaily.com/2008/01/17/hom...deduction/

[antonitte03]

For me, I’d prefer dumping the deduction and replacing it with a generous tax deduction for not impacting the environment with your extra work. I think that’s the direction we should be moving in.




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