Posted by John Tennant on 5/17/13 5:03pm
Msg #470384
Explanation of Red Flag - Business use of home.
I have had many PM's on this so here it is right from the horses mouth.
Business use of your home has been a “red flag” for many years. To help clarify what the IRS looks at when determining the deduction I have pulled the following right from their publication. I hope this will help those of you either taking this deduction, or contemplating taking the deduction. If taken incorrectly it can also have an effect on your mileage deductions and can be very costly if denied during an audit.
This information is from IRS Publication 334, pages 37 & 38.
www.irs.gov/pub/irs-pdf/p334.pdf
Business Use of Your Home
To deduct expenses related to the part of your home used for business, you must meet specific requirements. Even then, your deduction may be limited.
To qualify to claim expenses for business use of your home, you must meet the following tests.
1. Your use of the business part of your home must be:
a. Exclusive (however, see Exceptions to exclusive use , later),
b. Regular,
c. For your business, and
2. The business part of your home must be one of the following:
a. Your principal place of business (defined later),
b. A place where you meet or deal with patients, clients, or customers in the normal course of your business, or
c. A separate structure (not attached to your home) you use in connection with your business.
Exclusive use. To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. The area used for business can be a room or other separately identifiable space. The space does not need to be marked off by a permanent partition.
You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes.
Example.
You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. Your family also uses the den for recreation. The den is not used exclusively in your profession, so you cannot claim a business deduction for its use. My note: this also applies to those that use the kitchen area. That will also not be a business deduction.
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Reply by ApplePie on 5/17/13 5:51pm
Msg #470387
My office
I have a room I use for my office. No one is allowed in here. There is a chair in here for them to set and visit with me but other than that it is off limits. I have personal items in here. Pictures, some personal files in the same cabinet as business, and personal items on the computer. Do these things disqualify my deductions for this room.
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Reply by John Tennant on 5/17/13 6:00pm
Msg #470388
Re: My office
In my opinion, mine only, I would not think you would be disqualified. For the deduction, you may use the original method of percentage of home vs percentage of office calculation, or the new this year Simplified Option. You can take $5.00 per square foot of office space up to a maximum of 300 square feet without going through the long calculation. The complete details are on the IRS website on Revenue Procedure 2013-13.
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