What qualifies as a home office for tax deduction purposes? I live in a 1 bedroom apartment though??

Question

So, since I live in a 1 bedroom apartment, I do not have a room or office that I can exclusively use for my business. I do however, have a section of the apartment that I exclusively use. Does this count?

I am planning on meeting with a CPA to discuss, but wanted some knowledgable guidance before going in? I'm sure there is something that protects someone like me in the tax code...or maybe not. If so, maybe it's worth it to get into a 2 br apartment. Buying is not an option for me right now. So please, keep your responses to the apartment living situation.

Also, is the SUV tax break as sweet as it sounds. For a 40K Volvo XC-90, I'm calcuating 28,000 in write-offs the first year or more (though I guess it depends on usage and this is one of the reason where my home office write off comes in). And believe me, I own my own biz and derive 60% of my income from it.

Thanks!

Answer 1

http://www.irs.gov/taxtopics/tc509.html
IRS Business Use of Home - Yes I will say it will qualify but as the one person stated will be based on percentages. but read this first.

SUV - perhaps you refer to Section 179 - It may seem like it.

check out http://www.irs.gov and search for this one. You will find it or see pub. 954 as well.

You may take depreciation or actual expenses on auto's. Some are subject to Limitations as with Luxruy auto limits, if leased there are lease exclusions etc. With Deprection is taken you may also take parking tolls for example. Expenses include fuel and oil, maintenance, etc. Not any type of depreciation.

Apt. is not qualfifying for depreciation unless you own and then only at rates that your percentage of use is qualfifying for. Dont' expect huge wrte-off for business use of home.

Expenses will depend on many factors. Are they excessed will they be frowned on by revenue. Miles are very much audited things so gooooooooood records. Same with meals and otherwise.

Is it is unreimbused employee business expenses etc. certain income limitations and otherwise apply. Research well or pay the piper later. You gave the best advice. I am going to talk to an accounting firm. Kudos.

Yes we are an accounting firm.

Good luck.

BC Business Services, Inc.
http://www.bcbsinc.com

Answer 2

typically the space has to be used exclusively for business purposes. This has to be legitimate as well, for example, a computer in the corner of the living room does not really fit the definition per se, but your CPA might allow it. You basically figure out what the sqare footage of the space you use is of the entire house or appartment. SO if its 25% of the space, you can deduxt 25% of the rent, utilites etc.

The best thing I can tell you is to be REASONABLE.


Not sure about the SUV?? That sounds like waaaaaaaaaaay
too much of an allowable writeoff for one year.

Answer 3

Does your employer require you to have a home office? Or the nature of our job require the home office? Or do you run your business from your home office?

That's more important than square footage of separate room --although it does need to be a defined space, used only as an office.

If the home office is just a convenience for doing work your brought home, you don't get a deduction.

Answer 4

I'm pretty sure that counts...any space in your home that is used exclusively for an office. You'd just need to calculate the percentage of your home that is the office area.

Answer 5

Its not so much what you do...but a certain percentage of your total square footage of your place. The guide will tell you.