I help people just like you to save money, build businesses, and eliminate stress! I had a question in my inbox last week about home office deductions and I thought this would be a great subject since so many people are starting new businesses or side businesses in 2016.
Here are a few tips if you work from a home office.
A home office needs to be a true home office, not just part of your den or dining room.
There are exceptions to this rule regarding inventory, so if you do carry inventory, please talk to your professional about how you can stay in compliance with this rule,
Another exception is if you have an office that you go to. If that is the case, you cannot take the home office deduction, because it’s only available for people that only have a home office.
So let’s assume you have a real home office, no other office, and you are running your business there. Now you can take the deductions.
You are going to need the square footage of your office versus the square footage of your home/apartment.
This will establish the percentage of what you can deduct.
If you file your own taxes, it will go on form 8829.
Your CPA will handle that, or if you use a program like Turbo Tax, then it will prompt you to that form, to enter those square footages. Next you enter in your Mortgage and Tax, or rent plus utilizes insurance. Don't worry, the form is super easy to follow.
You may want to use a professional if you are self employed, even if you are small.
I have redone many tax returns for small biz and saved them thousands of dollars.
That being said, for simple returns, I do think you can do a simple tax return, but by carefully following the prompt and answer the questions, it’s not too hard to handle.
I hope this helps! If so, please like and share, and subscribe on my website TheMoneyTherapist.com
Remember, you deserve abundance, not just with money, but with life!