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3 tips for deducting your home office

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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.

Categories: Business tips
Tags: tax deductions, legal, home office

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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on Any legal or other information found here, on, or at other sites to which we link, should be verified before it is relied upon.

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