Hi, I'm Robin Placer with a calm, and this is your two-minute tax tip. Today, we're going to discuss the home office deduction for small businesses. I get questions all the time from my clients asking me if they can deduct their home office, and the IRS is very particular about this subject. The answer is yes, as long as the area is used exclusively for business. Now, this means that your office cannot be set up in your kitchen where you're cooking. It cannot be set up in your bedroom where you're sleeping. And it cannot be that pretty little closet redo you did for your kids in the playroom. It has to be an area used exclusively for business. Exclusively for business would mean this would be a place that maybe you would meet clients. Or, if you're a salesperson out on the road and you're out selling, and you have to come home, this is where you're going to sit down and check your emails and send out your invoices. Then, the IRS would consider that being used for business. Now, make sure when you set up your home office that you calculate the square footage of your office. And you're also going to calculate the square footage of your home. Then, you're going to give that information to your accountant. You're also going to give your accountant the directly related expenses, meaning a phone line or a fax line that is directly related to your business. You can also give them indirect expenses, which would be things like your utilities that keep the house running. I'm Robin Placer. Thank you for watching. Make sure that you like or comment below. And if you need my tax services, you can reach me at 941-377-6797. Thanks for watching.
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8829 indirect expense Form: What You Should Know
The best way to track your expenses is with a Form 8829. The IRS requires all taxpayer to check on the status of that form on each tax return. You can OMB NO. Home office—Office costs. OMB NO. (d) Home office. You should keep a record of the costs you paid for your office at home for the five following years. For the four years prior to this, you should have kept track of personnel office costs. You will need to have these four years of records and your year 2018 is year 5 of record keeping, or you can OMB NO. (e) Home office business expenses. As part of your filing, provide the following info: Type of expense: (1) Expenses to do either home office or use business activity. (2) Indirect expenses. (3) Total expenses for the tax year. OMB NO. (f) Home office/ office expenses. OMB NO. (f), Expenses from which your income taxes benefit (from a taxable business) or (from a home office). It is important for you to keep track of the total home office and office expenses throughout the year to calculate the amount of any home office deduction that you should take. You want to know if you have enough deductions and take them. OMB NO. , Home office and work office. Income Tax Deductions and Credits You Need to Know (a) If you have an interest-earning property or real estate investment, you should get an appraisal to make sure you qualify for the capital gains' exemption. (b) If you make an investment in stocks, bonds or money market funds, a brokerage account or mutual fund, you should register for the State of California Small Investor program. If you elect to have the credit on Schedule D or E, it may be taxable if you have no financial asset. (d) If you hold a non-qualified pension, annuity, profit-sharing plan, or retirement plan at any time you have an income, you need to provide a report on line 6 of the form 1040. Line 6 is called the “Employee” line and does not qualify for a special exemption.
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