Working at home- what to write off on taxes?

[kellia]

Dh has been working from home since the beginning of the year. He got a new position at work and they just don't have room for everyone at that site. It has worked out great for us, I just wish I could do the same!

Since he has a home office, I was wondering if there is anything we can write off on our taxes as work expenses. I have heard that is a big audit flag, though, so I'm worried about doing it! Does it need to be above a percentage of his/our income before we can use it? We purchased a desk and some office supplies, and he uses most of the internet and phone. But, since we also use that for personal use, I'm not sure how that would work.

TIA if anyone has any advice!

 

[Jenny3]

I work from home and there is a certain percentage of your household expenses you can write off (the space in your home dedicated to your office, percentage of your phone/internet, any office supplies, etc). I don't know the specific details as I let my accountant handle everything, but yes you can definitely write off your expenses from home for your business

 

[Sadie22]

Go on irs.gov and read the publications about self-employment and business expenses. The requirements to be able to take the home office deduction are very specific, and not everyone who works at home qualifies.

 

[crisi]

Go on irs.gov and read the publications about self-employment and business expenses. The requirements to be able to take the home office deduction are very specific, and not everyone who works at home qualifies.

They are also fairly complex. When you resell the home, you'll need to recapture the depreciation as gain. So you get the write off now, and pay later when you sell. It isn't an easy thing to do right, and if you choose to go this route, you should work with a tax professional and get good professional advice. Working with the tax professional is likely to eat up any savings you'd get from any possible write off.

 

[dhardawa]

I did this for a few years and the one thing I remember was that the space has to be used ONLY for the home office. So, if the home office is also where you shop online or get your personal email, you can't deduct it. Now, granted, this was a few years back and the rules may have changed.

 

[OrangeCountyCommuter]

The rules are very strict and it is an audit flag

I am an accountant and after doing the math and talking with my friends in tax I passed on this deduction. Just too risky for too little return IMHO

 

[timmac]

It sounds like the deduction you're referring to is what would appear on a schedule C for "business use of home". This only applies if you're running your own business, or are a contractor, etc. You wouldn't be able to do this for just regular W-2 employment.

 

[seashoreCM]

The area used as the home office/workshop does not have to be an entire room and does not have to be curtained off but it does have to be reserved exclusively for the office/workshop work.

You can work at home without having or deducting a home office.

Desks, computers, and other equipment can be written off even if you don't deduct for the office itself. For some items notably cars and computers, you need to keep a log of hours or miles to distinctly set apart business versus personal usage.

No cheating and moving everything aside so people gathering in the other half of the room can encroach while you host the neighborhood Super Bowl game party.

 

[disneymom2003]

I too would suggest a tax consultant. We do this as my husband is self employed and runs his business from there. I am not sure of the deductions though

 

[ICF]

The rules are very strict and it is an audit flag

I am an accountant and after doing the math and talking with my friends in tax I passed on this deduction. Just too risky for too little return IMHO

yeah, I tried to walk thru it using one of the on-line software programs I use for my taxes and could tell the reward wasnt nearly worth the risk. It didnt seem to add much to my refund and knew would raise some flags elsewhere.

It may be different if you actually ran a business out of the house, but to just "work from home" for ABC company I dont know that it's worth it.

 

[ilovepete]

Well, this is interesting. I claim a home office. I do work from home for a company that sends me a Form 1099 for self employment. But now, after reading this, I'm wondering if I would be better off not claiming it? I mean I'm not doing anything wrong (that I know of), so having an audit wouldn't be the end of the world, but it doesn't sound fun, either so I'd rather avoid it.

Does anyone know if it would be a flag (or maybe bigger flag) to have claimed a home office for several years, and then quit claiming it, even when you still have the business?

 

[SamSam]

Dh and I have a home office for our business, but it is a room dedicated to our business, not used for anything else. Our Tax Preparer writes off a percantage of all utilities ect. for it, but it's based on the actual percentage of the room sqare footage from the total sq. footage of our house.

It's a definite red flag, so talk to your accountant/tax person about it.

 

[mom2alix]

You do not have to be self-employed. You can use this deduction as an employee so long as you fill out a Schedule A and "the business part of the home is used regularly and exclusively and for the employer's convenience". Other posters are correct that it is very specific and you will probably want to get professional tax advice. Depending on the size of the room you have dedicated and the size of your home, this can be a significant tax deduction as you can potentially write off a "portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs".

See details here:

http://www.irs.gov/taxtopics/tc509.html

 

[Ginny Favers]

I probably wouldn't bother to do it on my own, but my tax preparer does all the calculations for us, so it's worthwhile. I work full-time outside the house, but use the home office for my second job. When my husband worked at home, we had two "offices" that we used. One was actually in our dining room, but since we didn't eat there and I only used it for work, it counted as a home office.

 

[Cheshire Figment]

I would also suggest going to www.irs.gov and order the following publications which will probably help a lot.

463 - Travel, Entertainment, Gift, and Car Expenses
535 - Business Expenses
551 - Basis of Assets
552 - Recordkeeping for Individuals
587 - Business Use of Your Home
946 - How to Depreciate Property

Mike (CPA Retired)

 

[minnie mouse ears]

You also cannot deduct the first home phone line into your house. If you have a second line, you can deduct that.

Be very careful with taking a home office deduction. You have to follow the rules exactly and they are very specific.

 

[QVCshopper]

I have worked at home for about three years now. I don't take the credit at all. There are many rules. To me, just saving gas money and the time of not driving all the time are wonderful.