The Home Office Deduction For Small Business And Employees
Hi I am Robin Platzer with the Tax Handlers.com and this is your Two minute Tax Tip on how your small business can qualify for The Home Office Deduction. Today we're going to discuss the home office deduction for small businesses, I get question all the time from my clients asking me if they can deduct their home office. The IRS is very particular about this subject, but the answer is "yes" you can take the home office deduction as long as the area you want to deduct is used exclusively for business. Now this means that your office cannot be set up your kitchen where you are cooking, it cannot be set up in your bedroom where you're sleeping and it cannot be that pretty little closer redo you did for your kids in the playroom. It has to be an area used exclusively for business. And exclusively for business would mean this would be a place that maybe you would meet with clients or if you are a salesperson doing outside sales on the road or say someone that does maybe lawn care and maintenance keeping you outside most of the time. Then you would need your home office to sit down check and check your emails or send out your invoices. If this is how you use your home office then the Irs would consider that exclusive area as being used for business. When you set up your home office make sure you calculate the square footage of just your office and you're also going to calculate the total square footage of your home and you're going to give that information to your accountant. And you are also going to give to your accountant directly related expenses for your office such as business only phone or fax lines and you can also give your accountant indirect expenses which are things like utilities that keep your whole house running. If keeping track of these expenses is a burden the IRS has come up with a simplified method of deducting your home office and that is to multiply the total square footage of your office (not to exceed 300 square feet) by a flat rate of $5. This method is a quick an easy way to take the deduction without worrying about depreciation recapture in later years if you sell your home.
If you are an employee and you can itemize tax deductions and your employer has you use your home office for their benefit not yours, meaning its more beneficial for you to work from home and not in your headquarters, then you to could qualify for this deduction,,
I am Robin Platzer, your Sarasota, Florida Accountant. Thank you for watching, don't forget to comment my video or give me a thumbs up.. If you need my tax services you can reach me at (941)377-6797