3 tips for deducting your home office
10/25/2016 | Author: Editorial Staff
In the September/October Texas REALTOR®, three tax experts offer advice to make your taxes audit-proof. Below are their tips for home-office deductions.
Don’t be afraid.
Many people are concerned about home-office deductions being a red flag for the IRS, but Sandy Botkin, attorney, CPA, and CEO of Taxbot, says that’s a myth: “A survey of people who claimed a home-office deduction versus those who didn’t found that the chance of getting audited was the same in both groups. If you’re eligible for the deduction, take it. It’s worth thousands of dollars.”
Keep it simple.
“The IRS has a simplified option for home-office deductions that a lot of people don’t know about,” says Allyson Baumeister, CPA at CliftonLarsonAllen LLP in Fort Worth. “It’s $5 per square foot for your home office up to 300 square feet—a $1,500 max deduction—and you don’t have to keep any records.”
If you’re worried that you’re leaving money on the table by figuring your home-office deduction this way instead of through utility bills and such, Jerry Love, CPA in Abilene, says don’t be: “I’ve found the $5 per square foot isn’t that far off from other ways to figure that deduction.”
Make sure your office is an office.
"The definition of a home office,” says Love, “is a place used exclusively for business. If you have a small house and do your contracts at night on the dining room table, that doesn’t count.” A guest room that doubles as an office is also not eligible for a home-office deduction, and neither is a music room with a desk.
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