Home Office Tax Deduction. Save Money Now!

Home Business Savings

The home office tax deduction is available to business owners who use a portion of their home to conduct key functions related to the running of their business. These days it is very common for new business owners to begin their first small business directly out of their home. This has been driven predominantly by the internet which allows entrepreneurs to operate worldwide while never leaving their home. If you meet the guidelines to take this deduction your home business can save extreme amounts of money.

Home Office Tax Deduction Guidelines

From the IRS website:

You can claim this tax deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively:

• As your principal place of business for any trade or business
• As a place to meet or deal with your patients, clients or customers in the normal course of your trade or business

Generally, the amount you can deduct depends on the percentage of your home that you used for business. Your deduction will be limited if your gross income from your business is less than your total business expenses.

Regular and Exclusive Use

The IRS does not give a concise definition of what is considered “regular use”, yet the requirements are met if business is conducted several times a week in your designated space. It is very important that your office is more than a room that you store your paperwork in. Exclusive refers to a space that is used entirely for business. If your space is shared with personal usage it is important that only a portion of the room qualifies for the deduction.

Principal Place of Business

The next requirement is that your space must be the “principal place of business”. If your house is your only place of business than you will have no problem taking this deduction.

Tax laws can be very confusing. Proper documentation is absolutely necessary when taking home office tax deductions. The best way to protect yourself is to contact a tax professional who can help you file your return. Sign up for a free tax strategy session with Pathfinder Business Strategies to help you get the most out of your deductions. Visit us at pfbs.com for more information.