posted on February 2, 2005 07:43:14 AM
Been working on my taxes. Looks like I qualify for home office deduction but not positive. Assuming I do...would appreciate any advice from others who have done same. I use about 12-15% of home space for office, work area and storage of product.Thanks!
posted on February 2, 2005 07:55:45 AM
I personally don't take it. I've heard that you are more likely to get audited if you do. This could be very wrong. However, the rules are so stringent on it and the deduction is so minimal, I don't bother. My office is not used solely for business as you can see now.
Cheryl
"No drug, not even alcohol, causes the fundamental ills of society. If we're looking for the source of our troubles, we shouldn't test people for drugs, we should test them for stupidity, ignorance, greed and love of power." ~ P.J. O'Rourke
posted on February 2, 2005 08:05:07 AM
We took a home office deduction for many years and never had it questioned. A few years ago our tax man said that it had become a "red flag" for an audit and was not worth the chance so we dropped it.
-----o----o----o----o----o----o----o----o
“The illiterate of the future will be the person ignorant of the use of the camera as well as of the pen.”
Maholy-Nagy, Vision in Motion, 1947
posted on February 2, 2005 08:57:43 AM
IRS has tigthened the rules on home office-it must be the place where sales/revenue is generated and it must be dedicated to that purpose 100%-
say you claim your den as home office,first it must be a place where you sell and get paid for the items you sold,not a place where you store and pack and sell them somewhere else ,say a fleamarket or show.
second,it must be used for that purpose always,meaning you cant be watching tv or playing games after hours.
This is really targeting professionals such as doctors,say they treat patients in hospital and come home to do paperwork in their den,that den should not be deductible.
say a acupunturist or shrink treat patient in that den,then they are earning their fees in that room,that room is deductible.
of course they should not be using that room for watching tv after hours .
-sig file -------Life is one big happy 'All You Can Eat' buffet .
posted on February 2, 2005 08:39:08 PM
My accountant told me that it not worth it to claim the deduction for a home office if you plan on selling your house within 5 years. Because if your married and sell your house $500,000 is tax free but if your claiming office deductions on the house you are going to pay some tax when you sell.
posted on February 2, 2005 09:12:10 PM
I do 99% of my business out of my home office; hold the antique events at another venue. Have never taken a home office on the advice of my accountant.
posted on February 3, 2005 06:18:50 AM
You need to get an accurate measurement of the actual space (square footage) used for business only. Calculate the percentage of that space in the house and go by that.
TAKE A PHOTO OF THAT SPACE!
If you are ever audited or questioned by the IRS show that photo as proof that it is used as business only. That includes the storage space used in the garage. Seperate all personal items from it, measure it and take a photo of that space as well.
We have professionals do our taxes and that was his professional advice.
Cheryl.....
Hanging out on the Vendio message board does not take away from the business use of your office. You are discussing with collegues about business strategy. Reading new sites is business related as trends in online commerce relate to your future success in business.
There is nothing to be afraid of in taking the deductions you are entitled to. There is nothing to be afraid of even if you get an audit provided you have all of your documents and reciepts in order.
posted on February 3, 2005 06:23:37 AM
...be afraid...be veeery afraid!
"Who could have possibly envisioned an erection — an election in Iraq at this point in history?"
Prez.Jim Beam, at the White House, Washington, D.C., Jan. 10, 2005
posted on February 3, 2005 11:06:17 AM
I was going to try to take it last year but it was so hard to understand - I just gave up (waited to late to have the time to research it) - I use about 1/2 my house but only a 1/3 or 1/4 could be consider as I use some of the space for personal stuff too.
Don't you really only get to take the depreciation or something?
posted on February 3, 2005 05:02:56 PM
Depreciation only refers to equipment like machinery and delivery trucks etc etc.
If you truely believe you use that much of your house for business only you should draw up a sketched floorplan of your house.
Map out the rooms, measure them and mark them on your sketch. Then re-measure your business only space mark it on your sketch and highlight or gray that area. Calculate how much in square footage used for personal and business.
Take photos of the areas!
Make a couple photo copies of your drawing so you don't have to do it again next year.
A computer could qualify for a depreciation deduction but that is really sketchy and probably more complicated than you'd want to deal with.
Upgrades in computer equipment used for business purposes are deductable. So are computer magazines and other supplies you don't use for personal use.
My husband is a contract software developer and works from home. So the bookshelf he bought and the computer books are deductible. As is the file cabinet and lamp.
The most important thing to remember is to have your reciepts organized. Just keeping them all in a shoebox is not enough. Highlight every reciept you save and mark the deductible items so when it comes time to tally it will be quick and easy.
Office supply stores sell mileage tracking books. If you didn't keep an accurate record of milieage used for business purposes it may be better to wait until next year to do it. OR if you calculate the mileage to the post office (for example) and you kept those reciepts if you paid at the counter that is technically a valid and legal log you can base your mileage deduction on.
You are entitled to every deduction available but if you want to take it all you need are logs showing your activity which you are claiming the deductions for.
ltray......... funny I guess I could label my bedroom for research and product development but I think in an audit the pictures might make the IRS agent a bit uncomfortable. lol
