Tax time!! Work from home!

[BK911]

Since I worked from home most of this year, going to deduct a portion of my mortgage and utilities.
Anybody have any suggestions for deductions that aren't so obvious?
%mortgage
%utilities
cell phone
internet
???

[GH85Carrera]

I believe those deductions were eliminated by Congress. You might be about to get your company to pay for them.

[doug_porsche]

I am not a tax attorney, and am repeating VERY OLD information that I heard, not what I know.

Be careful about the deduct mortgage path.
That, again what I heard not what I know, puts you taxes under a different set of review rule.


Fun addition to the story on who i heard this from.
He was part owner of the company. Had many more tax dealings then me, just an employee.

I was in the office when he got a call from his tax lawyer about a tax audit scheduled for later in the week.

The side of the call I heard when something like:
What do you mean you can't make the audit! Your my tax attorney!
You darn well better have a good reason!
What! At best you will be 5 to ten years late, depending on good behavior !

[jhynesrockmtn]

https://www.kiplinger.com/article/taxes/t054-c005-s001-working-from-home-can-you-claim-the-home-office-deduction

[cabmandone]

https://www.irs.gov/newsroom/heres-what-taxpayers-need-to-know-about-the-home-office-deduction

[KFC911]

Originally Posted by BK911

Since I worked from home most of this year, going to deduct a portion of my mortgage and utilities.
Anybody have any suggestions for deductions that aren't so obvious?
%mortgage
%utilities
cell phone
internet
???

No, nope, and hell nope .... sorry. No deductions for you.... none.

Well.... not legally.

[BK911]

Dang it man.
Arent you guys just full of sunshine this morning!!

[island911]

BTDT.

Ask yourself if you would like your city hitting you up for business tax and business regulation on your home office.

Understand that businesses have HUGE targets du Bureaucracy on them.

I recommend that you do not invite that into your home.

But again, just my 2¢ worth

[944 S2]

Just had my taxes done. Apparently there are now two ways to deduct your home office. The first is what you have mentioned, using a % of your home and claiming a % of various expenses. The other options is relatively new but you can claim per sq/ft of office space at $5 sq/ft. I was told the later will not affect your exception from capital gains when you sell.

[Sooner or later]

If I work from home, do I qualify for a home office tax deduction?
If you're an employee working remotely rather than an employer or business owner, you unfortunately don't qualify for the home office tax deduction (however, please note that it is still available to some as a state tax deduction). Prior to the Tax Cuts and Job Acts (TCJA) tax reform passed in 2017, employees could deduct unreimbursed employee business expenses, which included the home office deduction. However, for tax years 2018 through 2025, the itemized deduction for employee business expenses has been eliminated.

Do I qualify for the home office tax deduction?
Generally speaking, to qualify for the home office deduction, you must meet one of these criteria:

Exclusive and regular use: You must use a portion of your house, apartment, condominium, mobile home, boat or similar structure for your business on a regular basis. This also includes structures on your property, such as an unattached studio, barn, greenhouse or garage. It doesn't include any part of a taxpayer's property used exclusively as a hotel, motel, inn, or similar business.

Principal place of business: Your home office must be either the principal location of your business or a place where you regularly meet with customers or clients. Some exceptions to this rule include day care and storage facilities.

What is "exclusive use"?
The biggest roadblock to qualifying for these deductions is that you must use a portion of your home exclusively and regularly for your business.

The law is clear and the IRS is serious about the exclusive-use requirement. Say you set aside a room in your home for a full-time business and you work in it ten hours a day, seven days a week. If you let your children use the office to do their homework, you violate the exclusive-use requirement and forfeit the chance for home office deductions.

[rwest]

I was told that one of the quickest ways to get audited is to claim a deduction for using part of your home for your business.

Have no facts or data to back that up though.

[RWebb]

https://www.thebalance.com/top-audit-triggers-that-catch-irs-attention-4153034

[Por_sha911]

Suggestion: get a good tax accountant and lawyer because you will be audited.

[Sooner or later]

Originally Posted by Por_sha911

Suggestion: get a good tax accountant and lawyer because you will be audited.

I took the deduction for a couple of years and was never audited.

[berettafan]

Originally Posted by rwest

I was told that one of the quickest ways to get audited is to claim a deduction for using part of your home for your business.

Have no facts or data to back that up though.

IMO this would not hold true using the new sq ft option. The actual deduction is a small number and thus doesn't offer a good return on audit investment by IRS.

Always discouraged getting greedy with home office deductions for my clients. I like the concept of reimbursing yourself for certain specific expenses. Shows up in the 'other expenses' schedule and imo is less of a flag.

[Por_sha911]

Years ago, the home deduction was very liberal. The IRS tightened down on it and said you have to have a dedicated space used exclusively for business purposes as opposed to a desk in a corner of the room. I stopped using the deduction at that point.
Statistically, a home deduction does trigger a much higher probability of an audit.

[Kraftwerk]

I am just just going to write a check to the IRS for $750 and call it a day.

[BK911]

Thanks guys.
Very informative discussion.

[KFC911]

Originally Posted by BK911

Thanks guys.
Very informative discussion.

Don't forget... none of it applies to a W2'er (like yourself) working from home anymore.