So, how is it that people can take a home office deduction on their tax returns? There are two times that I would like to discuss. But first, some ground rules to qualify this article. You cannot use it for tax advice as there are too many variables in tax. You need to contact a qualified tax professional. Don’t try this deduction on your own.
The obvious time that you can take a home office deduction is when you are running a business from your home. Therefore, you are a self-employed individual. Whether you are a day care provider or a contractor with your only office in your basement, you may be entitled to a home office deduction. The tax code has some criteria for the deduction. The office must be used regularly and exclusively for your business. That means that you cannot have your aunt Betty living in your office for three months. The IRS will be sticklers on these points. A tell-tale sign that you are not living up to the requirements of the tax code is that you only have one computer in the house and it is in your office. Better yet, the computer is full of downloaded games.
The second time that I would like to mention is that you can be an employee and qualify for the home office deduction. The criteria as an employee is the same as the self-employed example with the added rule that if you are working at home it must be for the benefit of your employer. For example, your employer tells you to work from home.
There is a lot more to the deduction than I wrote here. This is just a primer. If you think that you qualify, or you have some questions, please feel free to email me.