Do you regularly work from home? If you do there may be a tax deductions that allows you to deduct expenses for business use in your home.
In the past, if you wanted to claim a home office in your tax deductions you were required to calculate, allocate, and substantiate complex and drawn out requirements. The actual expense of the office had to be calculated including the mortgage interest, insurance, utility cost, repairs, and depreciation of your home. That may be the reason that on average on only 13% of American’s with a home office actually claim it on their taxes.
The IRS has introduced a new simplified option to qualify taxpayers to claim their home office as a tax deduction. All that you have to do is multiple a prescribed rate by the square footage of your office to find your deduction. For the 2013 year the prescribed rate was $5 per square foot with a maximum of 300 square feet. While that seems pretty easy there are two requirements you and your office must meet:
You must show that you use your office exclusively for your business: If you just throw a desk into a guest bedroom that you go in a couple of times a month when family is not visiting, that will unfortunately not get you a tax deduction. Your office has to be an exclusive area of your home that’s only use is for your business.
A majority of your business must be done in your home office. If you have an office in another location that doesn’t mean you can’t claim your home office, but you must spend a substantial amount of time in your home office to still be able to deduct it.
If you meet these qualifications speak with a tax professional about getting a home office tax deduction. You can also see more information at the IRS website: IRS Publication 587: Business Use of Your Home.