03.10.09
The Home Office Deduction
The home office deduction is one of those deductions that can potentially get you in to a lot of trouble if not handled correctly. Therefore, the best place to start is by making sure your home office fits the definition of a home office per the IRS. You can claim this deduction for the business use of a part of your home only if “you use that part of your home regularly and exclusively (1) as your principal place of business for any trade or business OR (2) as a place to meet or deal with your patients, clients or customers in the normal course of your trade or business.”
Another important thing to keep in mind when dealing with the home office is that the burden of proving it is a home office — used solely and exclusively as a home office – will be on you if the IRS demands proof.
Now, here’s the good news. Your home office does not have to take up an entire room. The key is that it is a space devoted exclusively to your business. To figure out just how much space is deductible grab the tape measure. After you have measured your dedicated work space, divide that by the square footage of your home. That is the figure you will use to calculate your home office deduction.
Remember that your deduction will be limited if your gross income from your business is less than your total business expenses.
Next up….the social security deduction.
