| You have your dream job and you are working in your | | | | can also be claimed. This would include heat, electric, |
| fuzzy bunny slippers five days a week. While you | | | | trash disposal, a maid or cleaning service, as well as a |
| have cut down on fuel costs by eliminating your | | | | security system. If it is a direct business expense, |
| commute, you may have found that other costs have | | | | meaning used only for the office, than you can claim |
| increased. If your utility bills are spiking since you | | | | 100%. When it is an indirect expense, meaning you use |
| switched to a home office, you may be wondering | | | | electric in the entire home and the office, you can only |
| about income tax deductions for home businesses. | | | | claim a portion of it. Likewise if you only use something |
| The income tax deduction for home business is | | | | for personal use, then it cannot be claimed for |
| actually several different deductions. You will need to | | | | businesses purposes at all. So, if a maid cleans your |
| complete IRS Form 8829 Expense for Business Use | | | | house twice a week but does not go in the office, |
| of Home and itemize your deductions. Keep in mind | | | | than you would not be able to deduct any of the cost. |
| that since you will be itemizing you can always be | | | | The amount of the deduction depends on the |
| audited by the IRS. Accurate record keeping is a must | | | | percentage of your home that is used for the business |
| and only claim the credit if you actually qualify. To | | | | office. If your office is located in an entire room an |
| determine if you qualify, the home office must be used | | | | easy way to find the percentage is to divide one by |
| regularly and exclusively for business. In other words, if | | | | the number of rooms in your home. So if you have |
| you have an office at another location and only use | | | | four rooms and one of them is an office you are can |
| your home on occasion, you cannot claim the home | | | | claim 25%. But if you have 10 rooms and only one of |
| office deduction. Your office must be used only for | | | | them is an office you would only be able to claim 10%. |
| business purposes. The exception would be a home | | | | Another easy way to find the percentage is to take |
| daycare where areas that are used for the child care | | | | the amount of square footage used for the office and |
| can be calculated, even if they are also used for the | | | | divide it by the square footage of your home. So, if |
| family. | | | | 200 sq. ft. is used for the office and your home has |
| If you qualify for the home office deduction you are | | | | 1800 sq. ft. you can claim about 11%. |
| probably wondering what can be claimed. If you do not | | | | If you are entitled to income tax deduction for the |
| own your home you can deduct a portion of the rent, | | | | home business, don't be afraid to claim it. Just |
| and if you do own your home you can claim the | | | | remember to keep meticulous records in case you are |
| mortgage interest and taxes as well as depreciation | | | | audited. For more information about home businesses |
| on the house. Also, the portion of the utilities, services, | | | | check out IRS Publication 587 Business Use of Home. |
| insurance, repair, and decorating used for your office | | | | |