More people than ever are working from home, so today we’d like to talk about the Home Office Tax Deduction, a topic that many of our readers may find interesting.
The first thing to know is that employees are not eligible for this tax deduction. Both homeowners and renters can claim this deduction by filing Form 8829.
The expenses that taxpayers can deduct include:
- Mortgage interest
What Can Be Considered a “Home”?
For the purposes of the Home Office Tax Deduction, several types of dwellings are considered a home. This definition includes:
- A house, apartment, condominium, mobile home, boat, or similar properties.
- Structures on the property, like unattached garages, studios, barns, or greenhouses.
- Doesn’t include any part of your property used exclusively as a hotel, motel, or similar business.
Two Basic Requirements
Taxpayers who intend to claim the Home Office Tax Deduction must meet two basic requirements. First, there must be an exclusive use of a portion of their home for conducting business on a regular basis. Also,your home must be your principal place of business.
If you meet these two requirements, you can calculate your deduction using two methods, the regular method, and the simplified option.
The regular method divides expenses of operating the home between personal and business use. Self-employed taxpayers file Form 1040, Schedule C, and compute this deduction on Form 8829.
The simplified option is considering a rate of $5 a square foot for business use of the home; the maximum deduction in this case is $1,500.
Learn More About Taxes
Staying up to date when it comes to taxes is always a smart decision. These are some posts packed with insights, tips, and ideas to take the stress out of all matters related to taxes.
- 3 Online Resources You’ll Need After Filing Your Taxes
- What to Do if You Didn’t File Your Taxes on Time
- Expecting a Tax Refund? Read These Useful Facts
- 5 Tips to Keep in Mind When You File Your Taxes
- The Options Available to Those Who Can’t File or Pay Their Taxes by July 15
Contact the Experts at Meadville Tax Service
The IRS’ response to COVID-19 changes constantly, so it’s important to stay updated. You can check the IRS website or this blog. It’s also a good idea to get advice from an expert who can help you take advantage of the relief initiatives unrolled by the government.
At Meadville Tax Service we have the know-how and the drive to assist you so you can file your taxes efficiently, limiting your tax liability while staying compliant with federal tax regulations.