Tax Write-Offs: Do You Have a Home Office?


If you do, read this blog! Self-employed workers, contractors, freelancers, and telecommuters require a home office to conduct business duties. Business owners who use a home office for business may be able to deduct expenses tied to the creation and maintenance of the workspace.


This tax deduction is not just exclusive to homeowners. If you are a renter and you use your home space for your business, you could also qualify for these tax write-offs! A point of emphasis for you to keep in mind is that you will need to make sure that this space is the only space used for the business and is used on a regular basis.


Percentage deductible: Home-office business deductions are assessed based on what percentage of the home is used for business. To find this number, one must measure the square footage of the office space and find what percentage it is of the total area of the home.

  • Eligibility: To qualify for the home-office deduction, the taxpayer must utilize part of the home “regularly and exclusively” for business. The office does not need to be in a separate room, but it must be in a space solely designated to work and business operations.

  • Example deductions:

  • Direct expenses, including designated phone lines, paint jobs, and long-distance call costs

  • Indirect expenses, including utility bills, general repairs, and homeowners insurance

  • Special considerations: There are two primary options business filers can opt for when taking the home office deduction: simplified and standard. The simplified option is easier, but could potentially result in a smaller final tax break. The standard option requires a bit more mathematics and precise recordkeeping but could yield a larger deduction.

Check out the link below for a list of other tax deductions you can claim this tax season!


https://www.ritbsinc.com/small-business-tax-deduction-list


What questions do you have about tax season? We are here to provide help with tax preparation, accounting, payroll management, and business formation! R&I Tax and Bookkeeping is here to help! You may contact us via our 'Contact' page at https://www.ritbsinc.com/contact. We can also be reached via phone at 253-777-1106.

 

Osterhaus, E. (2021, February 1). Complete list of small business tax deductions (2021). QuickBooks. Retrieved December 16, 2021, from https://quickbooks.intuit.com/r/taxes/small-business-tax-deductions/


Home Office deduction. Internal Revenue Service. (n.d.). Retrieved February 14, 2022, from https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction


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