Posts Tagged ‘Business Use of Your Home’

Do You Use An Area of Your Home For Your Business? Are the Costs Deductible?

Sunday, January 23rd, 2022

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice. 

In my many years of practice this has been one of the most difficult tax deductions to explain to my tax clients, and to test for meeting all of the requirements for this tax deduction.  If you search the Internet or talk with tax preparers, it’s one of the IRS “Red Flag” areas that is guaranteed to be scrutinized carefully when your filed  tax return is evaluated and reviewed.   The IRS guidelines and requirements are very specific:

2006IRSpolicyforbusinessuseofthehome.doc (live.com)

If your tax return is examined, you’ll receive several, specific questions and you will be asked to fulfill  certain criteria to first determine if you meet these requirements.

Next, how are these business expenses determined and calculated?  There are two options that are available to you:

1.  You can use the “IRS Simplified Method” – # of square feet used for business x $5.00 per square foot, or

2.  IRS Form 8829 “Expenses For The Business Use of Your Home” – 2021 Form 8829 (irs.gov)

a.  The business expenses from Form 8829 will be reported on Schedule C of your tax return – “Profit and Loss From Business”

b.  The remaining non-business expenses are reported on Schedule A (“Itemized Deductions”)

Be sure to test your tax return software for accuracy and mathematical accuracy!

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