Posted by LAG-FL on 4/3/05 2:37pm
Msg #29393
Home office and depretiation on house
Does anyone who does not have a business license use the home office deduction? If you did not have a license then you couldn't do that? Right? Serious question. Also what is the stuff about the depretiation you have to take on your house and then when you sell the profit is considered income and you get taxed on that. I just ordered all the tax info from the IRS. It seems easier not to even deal with the home office deduction. What have others been doing?
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Reply by CaSigner on 4/3/05 2:45pm
Msg #29395
Your question ties in with my initial question regarding the business license below. I want to claim my business expenses for my home office on next years taxes. Do you have to have a business license to deduct home office expenses?
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Reply by ERNA_CA on 4/3/05 3:17pm
Msg #29398
It is my anderstanding that if you plan to file as a business in order to deduct business expenses you do need to have a business license. Personal deductions are very limited when you file a personal tax return.
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Reply by Cheryl_NV on 4/3/05 6:30pm
Msg #29430
This is not true. A business license has nothing to do with your income taxes, they are 2 separate things.
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Reply by Paul_IL on 4/4/05 3:23am
Msg #29467
a business license is Not required to take the home office deduction
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Reply by Melody on 4/3/05 3:59pm
Msg #29404
Talk to an accountant
You are asking some serious questions. Serious in the sense of how much trouble you can get into if you do not handle things correctly.
An example:
You wouldn't think the IRS would go after school teachers. They work so hard and make so little money. But the computers at the IRS discovered that teachers were enjoying "too much" in the way of deductions related to use of home offices. The IRS went after them. Not just denying the deductions but slapping penalties on them as well.
You are not a kid with a newspaper route. Get a consult from a GOOD accountant to protect yourself on both the license and tax issues.
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Reply by BrendaTX on 4/3/05 5:11pm
Msg #29413
IRS Reading
Individual Income Tax Pub:
http://www.irs.gov/pub/irs-pdf/p17.pdf
Publication 334 (2004), Tax Guide for Small Business
(For Individuals Who Use Schedule C or C-EZ)
For use in preparing 2004 Returns
http://www.irs.gov/publications/p334/index.html
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Reply by Victoria/FL on 4/3/05 6:01pm
Msg #29424
I don't think you need to have a business license in order to deduct household expenses on your tax return. I have been doing it for several years since my husband has an office at home in which he conducts a majority of his business. We deduct a percentage of our household expenses which pertain to his business use, such as electricity, phone, etc. since we have a home office set up solely for the purpose of him running a business, it only seems fair. However, we do not have any customers come to the house, he is a district manager of several stores.
Check with a good CPA, I wouldn't try to do it on my own. I bring a list of items I think we should deduct and he tells me what I can and cannot use.
Not related to business use, but I tried to deduct our $800 gambling loss from a cruise earlier this year....he explained that I could only deduct a loss if I also claimed gains! Oh well, I tried! That $800 hurt!
This is my opinion only, I am not a certified tax accountant.
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Reply by HisHughness on 4/3/05 10:21pm
Msg #29455
Jon can verify this, but I think the rule is that if you are an employee, and if your employer provides a workplace, then you cannot deduct expenses for a home office. If, on the other hand, you are employed and also have your own business, you can deduct an office for that business.
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Reply by Cheryl_NV on 4/3/05 11:24pm
Msg #29458
This is correct
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Reply by Victoria/FL on 4/4/05 8:23am
Msg #29481
That is correct. In my husband's instance, his employer does not provide office space.
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Reply by Cheryl_NV on 4/3/05 6:28pm
Msg #29429
Having a business license has nothing to do with your income taxes. One thing has nothing to do with the other.
You are right about having to recapture the depreciation and call it income when you sell your house. I rarely recommend taking home office expenses for that reason.
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Reply by melissaNV on 4/3/05 6:50pm
Msg #29434
how to find a good accountant?
How do you know they are any good?
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Reply by Cheryl_NV on 4/3/05 6:52pm
Msg #29435
Re: how to find a good accountant?
Recommendations from other people.
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Reply by Jon on 4/3/05 7:49pm
Msg #29444
I agree with Cheryl, and rarely recommend taking the home office expense if you own your home(I don't even take it myself). If you are renting, then the home office deduction is a great write off, just make sure you keep all pertinent records. As far as finding a good tax consultant, I posted above some questions you can ask, and of course recommendations from those you trust are always a place to start.
Cheryl, perhaps you could read my post above and add additional questions that may help others in selecting a tax professional.
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Reply by Cheryl_NV on 4/3/05 7:53pm
Msg #29445
I agree w/Jon and no I do not have any additional questions, I like the questions you posted.
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Reply by Cheryl_NV on 4/3/05 7:54pm
Msg #29446
Jon what state are you in and do you actively prepare tax returns? I am in NV and am an active preparer. Dou you prepare all states or just your state?
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Reply by Jon on 4/3/05 8:09pm
Msg #29447
Re: Home office and depreciation on house
I am in Ca and yes I actively prepare taxes. So far I have only needed to prepare taxes in Ca and OR, but I like to learn and am a quick study if the occasion arises to do different states.
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Reply by LAG-Fl on 4/3/05 8:26pm
Msg #29449
Re: Home office and depreciation on house
Thanks Everyone.
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Reply by Cheryl_NV on 4/3/05 8:29pm
Msg #29450
Re: Home office and depreciation on house
Jon, basically a state is a state. I have done every state at one time or another. Living in Las Vegas everyone here is from somewhere so you have to be able to do all states.
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Reply by Jon on 4/4/05 12:46am
Msg #29462
Re: Home office and depreciation on house
Cheryl,
If that's case, I do all states now!!! 
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Reply by ERNA_CA on 4/4/05 12:50am
Msg #29463
Re: Home office and depreciation on house
The quiestion is, do you do taxes by E-docs?
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Reply by Jon on 4/4/05 1:05am
Msg #29465
Re: Home office and depreciation on house
I can work that out, but I need them at least 2 hours ahead of time!!!!!
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Reply by ERNA_CA on 4/4/05 1:13am
Msg #29466
Re: Home office and depreciation on house
Let me get back with you on that. Have to get all my recipes together , you will stand by with paper ready in your printer? And by the way do you have a Laser printer?
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Reply by Cheryl_NV on 4/4/05 9:12am
Msg #29488
Re: Home office and depreciation on house
Yes
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Reply by sue on 4/4/05 7:22am
Msg #29473
I use a CPA for my taxes and he has me take the home office expenses, since I do not anticipate moving. What would your reason be for no having people take it if they qualify since it is a legitimate deduction? I need all the deductions I can get!!
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Reply by Cheryl_NV on 4/4/05 9:17am
Msg #29489
Because if you own your own home when you go to sell it you have to recapture those deductions and call them income. It will be very costly. There are other ways around that deduction that won't be as costly.
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Reply by sue on 4/4/05 10:58am
Msg #29499
so you're saying since I MIGHT, PERHAPS some day move at some unforseen point down the road I shouldn't take a legitimate, legal deduction now? What if the laws change and they remove that stipulation? I'd then not have taken a legitimate deduction when it was permitted.
I guess I'll stick with my CPA and take the chance on recpaturing my deduction if and when it may happen 20 or 30 years down the road.
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Reply by Cheryl_NV on 4/4/05 11:09am
Msg #29500
I never said I won't take it, I said I don't recommend taking it. I also said there are other ways to get the deduction without taking home office.
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Reply by Jon on 4/4/05 9:59am
Msg #29490
It may be that because you don't anticipate moving, you don't have to worry about recapturing the depreciation. Most people only stay in a home for 3-5 years(according to what I've read).
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Reply by PAW_Fl on 4/4/05 11:34am
Msg #29508
So, don't take the depreciation. You can still figure the percentage of use and take the cost of utilities (percentage of) as a business expense, right? Then you don't have to recapture depreciation expenses when you terminate your business or sell the property.
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Reply by Jon on 4/4/05 11:44am
Msg #29512
Actually, even if you don't take the depreciation, the IRS can still make you recapture it when you sell, based on the amount you SHOULD have taken.
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