Is a Home Office Deductible?

December 31, 2019 by OSYB Staff

Intuit QuickBooks shares some information that may help you figure out whether you can deduct your home office. First, they recommend knowing the tax forms that you need to fill out as small business owner:

• Schedule C is where small business owners who are self-employed report their business income and expenses
• Part 2 of the tax form lists expenses for the business use of your home. Small business income less expenses equals your net profit, and the profit is added to other sources of income on Form 1040, the personal tax return.
• Business profit is added to interest income, dividend income and possibly to your spouse’s W-2 income (if you file jointly). The IRS uses total income on Form 1040 to calculate your tax liability.
• Form 8829 is the form used for home office tax deduction for qualified self-employed persons

Here are some examples of home offices eligible for deduction:

• A self-employed plumber spends most of his time at client locations. They use a home office to handle billing, accounting and setting up appointments.
• A self-employed salesperson uses a home office to set up appointments, write up orders and compile management reports. They sometimes does administrative work while traveling, but most of the tasks are performed in the home office.
• A doctor spends most of their time working at three different hospitals. One hospital provides shared office space for a group of doctors, but they use a home office instead. They regularly use the home office to contact patients regarding scheduling, and prepare for treatments.

Each of these self-employed workers uses a home office regularly and exclusively for business, and the home office expenses are deductible.

Please note that: ” Tax reform legislation has eliminated the home office deduction for employees. The Tax Cuts and Jobs Act (TCJA) removes the deduction for tax years 2018 to 2025.”

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For full article: Can I deduct the cost of a home office?

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