ADVERTISEMENT



Google       

Home -> Law Blog Directory -> Law Technology Blogs -> Legal Andrew

OR PHONE (866) 635-1838 for Bankruptcy Help, (866) 635-6190 for Divorce,
(866) 635-2689 for Personal Injury or (866) 635-9402 for Criminal Defense

Find a Local Lawyer

Bankruptcy (866) 635-1838
Divorce (866) 635-6190
Personal Injury (866) 635-2689
Criminal Defense (866) 635-9402

Bookmark

Law Technology

: Legal Andrew

Tax Deductions - The Home Office Deduction

By Andrew Flusche

ADVERTISEMENTS

It’s important to take all your legal tax deductions to get the biggest possible tax refund. If you are self-employed, this is even more critical. Here is a quick primer on an elusive area of tax preparation: the home office deduction.

There are a variety of factors you must meet to claim a deduction for your home office. But I’ll explain each one individually.

Proper work status

To qualify for the home office deduction, your work status must meet one of two tests:

1. You are self-employed. If you run your own business, you’re all set. Jump to the next main factor.

2. You are an employee who works at home for your employer’s convenience. What the heck does that mean? Basically, it means that you doing work from home must be for the benefit of your employer, not yourself. If you don’t have a work space at the office, that would qualify. But if you just work from home to save gas, that won’t count.

After your work status meets the rules, we have to look at the nature of your home office use. These requirements can be even more technical, but they’re doable.

Regular use

The home office deduction requires that you use your space for business on a “regular” basis. This is evaluated based on all the facts and circumstances of your use.

If you have a desk that you use for work a couple times during the year, it probably won’t count as regular use. But if you work from home once a week, that probably counts.

Exclusive use

This factor is where some people get hung up. Your home office space must be used “exclusively” for business. Again, this is evaluated based on the specific facts of your case.

The IRS gives an easy example of a use that wouldn’t qualify for the home office deduction: using a den for work and for family recreation. Since the den isn’t used exclusively for business, you can’t take the deduction.

But the rules don’t require you to have an entirely separate room for your home office. You just need a separately identifiable space that is exclusively for business. Thus, if the desk area in your den is only used for business, you can deduct that portion of the room.

Principal business place

Once you’ve met all the other factors, your home office still must be your “principal place of business.” This doesn’t mean it’s your primary business place. You just have to meet one of these tests:

1. You do most of your administrative / managerial tasks there. You don’t have to do all your admin work in your home office, but it must be the only fixed location where you do this type of work.

2. You meet clients or patients there. This use cannot just be sporadic. It has to be “substantial and integral” to your business.

3. It’s a separate structure. If you have a shed or barn that is regularly and exclusively used for your home office, you’re golden.

I have deliberately re-organized these requirements in a different way from the IRS regulations. You may seem them written out differently somewhere else, but I think my explanation makes it easier to understand.

More information

The IRS has some great information available about the home office deduction. Check out its primary page on deducting your home office. Also, Publication 587 (PDF) covers the Business Use of Your Home.

Of course there is no better way to get information on tax deductions than consulting an accountant.

Full post as published by Legal Andrew on January 20, 2009 (boomark / email).

Bloggers, promote your law blog by nominating your blog for inclusion in USLaw.com's Law Blog Directory and RSS Reader. Benefits described.
Related Law Articles

Lawsuits and Settlements

Related Searches

























































































































US Law
#1 Online Legal Resource













Your Blog Subscriptions
Subscribe to blogs

10,000+ Law Job Listings
Lawyer . Police . Paralegal . Etc
Earn a law-related degree
Are you the author of this blog? Adding USLaw.com to your Blogroll increases relevance. You qualify to display a USLaw Network badge.
Suggest changes to this blog's description or nominate another for inclusion. Register for updates.


Practice Area
Zip Code:

Contact a Lawyer Now!






0.0144 secs (new cache)