Does anyone know what percent is deducted if you claim a home office?
also is the fact that you can ONLY work in the room strictly enforced?
Do not know the deduction, but a home office consist of a room solely used for business and I believe it must have a phone line in it and be a real room.
Well im 18 and about to start my business. Im going to be living on campus a few miles away and have my current room as my office. If i keep my play drums and have a bed in the room can i still claim it as a home office? There will be a business line in the room.
A “home office” is any space that u use in your living quarters to conduct business.
The percentage is determined by the amount of that space as compared to the total available.
It can include a closet or garage where you keep inventory or tools and doesn’t have to have a phone line.
Maybe you are using 1/3 of your dorm room? Yo can deduct 1/3 of all expenses related to that room.
Home office deductions can get complicated if the dollar amount gets high because the IRS knows it’s an area of confusion. Good luck!
1/3 of a room doesn’t count. it must be a room, separate from the rest of the house, used exclusively as an office. Got a bed in it? no deduction. Corner of the game room? no deal.
It doesn’t have to be your “only” office any more (it can be a 2nd office for your employers convenience, for example) but it does have to be “only an office.”
Once you meet that criteria, your home office deduction is figured as the ratio of the office to the entire home (a 100 ft2 office in a 1,000 ft2 house = 10%) applied to all of your household expenses. Now, 10% of your home utilities, insurance, maintenance, yard work, plumber, new roof, etc all become deductible.
Home office deductions cannot take a Sch C business into a loss – extra home office deductions are carried forward to future years.
What if the office is in a non permitted converted garage or basement where it is not included in living square footage?
if the space is no longer usable as a garage, it should be added to the home’s ft2.
be aware that in years past, the home office deduction was widely abused and as such got a lot of scutiny from the IRS. proceed with cuation and consider discuss your exact situation with a tax professional.
if you own your own home and take the depreciation deduction, then you will need to deal depreciation recapture upon sale in the future.