Posted by : Daniel Stoica in (Blog, Business Tax Credit, Federal Taxes, Income Tax Return, Tax Filing, Tax Forms, Tax Tips, Tax Topic) On: March 13th, 2012
Here are six requirements that will help you determine if you qualify for a home office deduction.
1. First of all, in order for you to claim a business deduction for your home, you must use part of your home regularly and exclusively:
• as your principal place of business, or
• as a place to meet or deal with clients, customers or patients in the normal course of your business, or
• in any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.
2. The amount you can deduct generally depends on the percentage of your home that you use for business. However, your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.
3. For certain storage use, rental use or daycare-facility use, you are required to use the property regularly but not exclusively.
4. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.
5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on Form 1040 Schedule C, Profit or Loss From Business.
6. If you are an employee, additional rules apply for claiming the home office deduction. For example, the regular and exclusive business use must be for the convenience of your employer.
To get more information about the home office deduction, check out IRS Publication 587, Business Use of Your Home, available at www.IRS.gov or by calling 800-TAX-FORM (800-829-3676).
You may also want to contact a tax professional to find out more about tax deductions for your home office.