Many business owners now operate or conduct their business activities from their home. This common deduction was once considered an audit red flag and is now so common that the IRS recently added a simplified option to calculate home office deductions for those that qualify.
To qualify for the deduction you must satisfy two requirements:
First, you must regularly use part of your home exclusively for conducting business. For example, if you use an extra room or space within the house to run your business, you can take a home office deduction for that space.
Second, you must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction.
Generally, home office deductions can be taken for expenses such as utilities, property insurance and home owner association fees to name a few. The deduction for home office expenses are based on the percentage of your home devoted to business use and prorated for that area used for business. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities to claim the deduction.
The home office deduction can save you on your taxes if you qualify and BAAP CPA can help. Please contact us to discuss your specific situation to see if you qualify for this valuable deduction for your business.
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