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If you\u2019re self-employed and work out of an office in your home, you may be entitled to home office deductions. However, you must satisfy strict rules.<\/p>\n
If you qualify, you can deduct the \u201cdirect expenses\u201d of the home office. This includes the costs of painting or repairing the home office and depreciation deductions for furniture and fixtures used there. You can also deduct the \u201cindirect\u201d expenses of maintaining the office. This includes the allocable share of utility costs, depreciation and insurance for your home, as well as the allocable share of mortgage interest, real estate taxes and casualty losses.<\/p>\n
In addition, if your home office is your \u201cprincipal place of business,\u201d the costs of traveling between your home office and other work locations are deductible transportation expenses, rather than nondeductible commuting costs. And, generally, you can deduct the cost (reduced by the percentage of non-business use) of computers and related equipment that you use in your home office, in the year that they\u2019re placed into service.<\/p>\n
Deduction tests<\/strong><\/p>\n You can deduct your expenses if you meet any of these three tests:<\/p>\n Principal place of business.<\/strong> You\u2019re entitled to deductions if you use your home office, exclusively and regularly, as your principal place of business. Your home office is your principal place of business if it satisfies one of two tests. You satisfy the \u201cmanagement or administrative activities test\u201d if you use your home office for administrative or management activities of your business, and you meet certain other requirements. You meet the \u201crelative importance test\u201d if your home office is the most important place where you conduct business, compared with all the other locations where you conduct that business.<\/p>\n Meeting place.<\/strong> You\u2019re entitled to home office deductions if you use your home office, exclusively and regularly, to meet or deal with patients, clients, or customers. The patients, clients or customers must physically come to the office.<\/p>\n Separate structure.<\/strong> You\u2019re entitled to home office deductions for a home office, used exclusively and regularly for business, that\u2019s located in a separate unattached structure on the same property as your home. For example, this could be in an unattached garage, artist\u2019s studio or workshop.<\/p>\n You may also be able to deduct the expenses of certain storage space for storing inventory or product samples. If you\u2019re in the business of selling products at retail or wholesale, and if your home is your sole fixed business location, you can deduct home expenses allocable to space that you use to store inventory or product samples.<\/p>\n Deduction limitations<\/strong><\/p>\n The amount of your home office deductions is subject to limitations based on the income attributable to your use of the office, your residence-based deductions that aren\u2019t dependent on use of your home for business (such as mortgage interest and real estate taxes), and your business deductions that aren\u2019t attributable to your use of the home office. But any home office expenses that can\u2019t be deducted because of these limitations can be carried over and deducted in later years.<\/p>\n Selling the home<\/strong><\/p>\n Be aware that if you sell \u2014 at a profit \u2014 a home that contains (or contained) a home office, there may be tax implications. We can explain them to you.<\/p>\n Pin down the best tax treatment<\/strong><\/p>\n Proper planning can be the key to claiming the maximum deduction for your home office expenses. Contact us if you\u2019d like to discuss your situation.<\/p>\n \u00a9 2020<\/em><\/p>\n <\/body> If you\u2019re self-employed and work out of an office in your home, you may be entitled to home office deductions. However, you must satisfy strict rules. If you qualify, you can deduct the \u201cdirect expenses\u201d of the home office. This includes the costs of painting or repairing the home office and depreciation deductions for furniture […]<\/p>\n","protected":false},"author":3,"featured_media":14507,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-14508","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-small-business-tax"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14508","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=14508"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14508\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=14508"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=14508"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=14508"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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