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- Some business meals get a full deduction
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- The kiddie tax: A basic review
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- Start your 2010 planning with your 2009 tax return
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- Can you take a home office deduction?
- Deducting interest expense: What you need to know
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- Who has to file an income tax return?
- New law allows early deduction for Haiti relief donations
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- Payroll - A 2010 employer update
- Review payroll reporting for 2009
- What to expect on your 2009 return
- Check these vehicle tax breaks for 2009
- Know the rules for backup withholding
- Tax issues come with gifting stock
- Hiring seasonal employees? What you need to know
- Don't get tripped up by a wash sale
- New law includes two important tax changes
- Two IRA tax breaks are scheduled to expire soon
- Take a tax deduction for worthless stock
- Withdrawals from your SIMPLE IRA may not be so simple
- Savings bonds can help pay for college
- Tax tips for first-time employers
- First-time homebuyer credit to expire November 30
- Closing your business has tax implications
- You need basis to deduct an S corporation loss
- Unemployed? Pay health premiums from your health savings account
- Some IRA terms you should know
- Employee or independent contractor? Don't misclassify workers
- Take a penalty-free IRA withdrawal for medical expenses
- Your business vehicle expenses are deductible
- Plan for the phase-out of tax breaks
- Your business could benefit from the extended net operating loss carryback
- When is income taxable, and when is it not
- IRS has a new procedure for correcting payroll returns
- Capture tax breaks when you refinance
- Prepare now for a possible disaster
- Tax law changes could affect your 529 plan
- Two reasons to review tax payments
- The COBRA credit: What employers must know
- Don't waste your tax refund
- A new vehicle could give you a new tax break
- Check out the "making work pay" credit
- Don't overlook a theft loss deduction
- Who owes self-employment tax?
- The Internal Revenue Service and Treasury Department Release Additional FBAR Guidance
- HIRE Act
- Health Care Updates
News
Can you take a home office deduction?
March 29, 2010
Can you take a home office deduction?
As you celebrate "National Organize Your Home Office Day" in March, you might discover a tax break under the clutter: the home office deduction. The deduction is available when you use part of your home regularly and exclusively as your primary place of business, or for meeting clients.
If you're an employee who works from home, there's an additional rule: The exclusive use must be for the convenience of your employer.
In either case, "exclusive" is defined as "all or nothing." Conduct any personal activities in the space you've designated as your office and the deduction is lost.
But satisfy the requirements and you can write off part of the expenses of running your home, including utilities, interest, and property taxes, as a business deduction. That means those costs can directly reduce business income, saving you income tax. If you're a sole proprietor, the deduction may also reduce self-employment tax. Though the amount you can claim is generally limited to business income, disallowed expenses can be carried forward to future years.
You can take the home office deduction on your 2009 return even if you have not done so in prior years, and you're eligible whether you're a renter or a homeowner.
What are the drawbacks? One drawback to taking a home office deduction is the potential for depreciation "recapture" that may apply when you sell your home, potentially reducing the amount of gain you can exclude from income.
Give us a call. We can answer your questions about the tax requirements of a home office deduction in your particular situation.
For more information, contact Ross Rizzo at 212-404-5528, rrizzo@sb-cpa.com.
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