Many individuals and business owners may work from home and will ask their tax attorney or CPA about the home office deduction. It is important to note that for the 2013 1040, the IRS has attempted to simplify taking the home office deduction. The article below has been drafted by a tax attorney at The McGuire Law Firm regarding the home office deduction.
To claim the home office deduction generally a taxpayer must use part of their home exclusively and regularly for business and part of the home used for business must be their principal residence or a place where the taxpayer meets clients or customers in the normal course of business or a separate structure that is not attached to their house. For example, a taxpayer may have a garage or barn not attached to their house of which they may wish to claim the home office deduction.
The actual expense method can be used by a taxpayer. If the house is rented the taxpayer may claim a portion of the rent, or if the home is owned the taxpayer may claim a portion of the mortgage interest and taxes & utilities. Generally, the amount a taxpayer can deduct will depend upon the percentage or portion of the home that is used by the taxpayer in the operation of the business.
In 2013 taxpayers may be able to use the simplified option to claim the home office deduction instead of claiming the actual expense. Under this simplified option a taxpayer multiplies the allowable square footage of the office by a rate of $5. The maximum footage allowed is 300 square fee. Thus, if using this method the maximum deduction a taxpayer could take on their 1040 individual income tax return would be $1,500.
The home office deduction can be limited if your gross income from the business use of your home is less than your business expenses. A self employed taxpayer will use Form 8829 (Expenses for Business Use of Your Home). The deduction can be claimed on your Schedule C which would be attached to your 1040 Individual Income Tax Return. An employee who attempts to take the home office deduction must meet addition criteria and rules to take the deduction. As an example, as an employee, to take the deduction, the business use must also be for the employer’s convenience.
You can speak with a Denver tax attorney regarding your tax questions and issues by contacting The McGuire Law Firm. All potential clients receive a free consultation with a tax attorney!