| Are you afraid to take advantage of the home office | | | | statements. For renters, there\'s usually fewer |
| deduction? Perhaps you are the victim of one or more | | | | numbers to crunch: the rent amount is the main figure, |
| of these common tax myths. Unfortunately, many | | | | and I\'m sure you know that without even looking it up. |
| self-employed folks shy away from taking the home | | | | You also need any renter\'s insurance or utilities you |
| office deductions for at least one of the following four | | | | paid. 3.The belief that it\'s not worth it. When you |
| reasons. 1. Fear of an IRS audit. There\'s been a rumor | | | | consider that there is likely hundreds or even |
| going around for years that the home office deduction | | | | thousands of dollars in tax savings at stake, don\'t you |
| increases the likelihood of an audit. I would love to | | | | think this is time well spent? If it takes you an hour to |
| know who started that rumor so I could give him a | | | | put this information together, and you save $500, |
| piece of my mind. For now, I\'ll just be thankful that you | | | | where else can you make that much money in that |
| are reading this article so I can tell you: don\'t believe it! | | | | amount of time? Sure, I know how much some people |
| There is no basis for it. Treat the home office | | | | despise paperwork and number crunching. Maybe you |
| deduction like any other legitimate business expense: if | | | | prefer not to touch a calculator with a 10-foot pole. If |
| you are entitled to take, by all means, take it. 2. | | | | that\'s the case, hire an accountant to do your return |
| Frustration over the record keeping requirements. | | | | and the extra tax savings from this deduction alone will |
| Obviously, there are some numbers that must be | | | | likely more than cover the tax preparation fee. 4. A |
| compiled to take the home office deduction. For | | | | misunderstanding of the tax benefits. Have you ever |
| homeowners, they include the following: mortgage | | | | heard a person say that he\'s not taking the home |
| interest, real estate taxes, homeowner\'s insurance, | | | | office deduction because he\'s already deducting |
| utilities (gas, electricity, water, trash removal, etc.) and | | | | mortgage interest and property taxes on Schedule A? |
| repairs. The first two are usually reported to you on | | | | Well, the next time you see your friend, dazzle him |
| your lender\'s annual Form 1098 statement. The utilities | | | | with this tax strategy wisdom: If you take the home |
| are easy to calculate by simply adding together your | | | | office deduction, you not only reduce your income tax, |
| twelve monthly bills for each service provider; if you | | | | but you are also reducing your self-employment (SE) |
| don\'t have those bills, the amounts are just a phone | | | | tax. This is because the home office deduction |
| call away to your friendly utility company. And home | | | | reduces your Schedule C profit. For every $1,000 of |
| repairs are easily found by looking through your | | | | home office expense, you are losing about $150 in SE |
| checkbook register and/or monthly credit card | | | | tax savings. |