Deductions and Write-Offs
The most frequently asked tax questions related to Deductions and Write-Offs
I have a place of business but meet with my clients at home. Does that qualify for the home office deduction?
Asked Monday, November 28, 2011 by an anonymous userCPA Answer:
If you meet with clients, patients or customers in a home office you can deduct home office expenses. Professionals such as doctors, attorneys, accountants and architects fall into this category. The home office must be used exclusively for business and be used more than occasional.
How do I prove that the home office is used as a principal place of business?
Asked Monday, November 28, 2011 by an anonymous userCPA Answer:
Examples of substantial management and administrative activities that would substantiate a home office deduction include billing clients, customers or patients, maintaining books and records, writing reports, scheduling appointments, ordering supplies, reading professional or trade journals.
What documentation is needed to deduct a home office?
Asked Monday, November 28, 2011 by an anonymous userCPA Answer:
In addition to actual receipts of expenses paid, It is a good idea to photograph your home office and keep it with the tax return it is being claimed on. This would add to the proof requirement of business use exclusivity.
How do I allocate indirect expenses in my home office?
Asked Monday, November 28, 2011 by an anonymous userCPA Answer:
Generally the number of rooms identified as the home office divided by total rooms equals your percentage of business use.
What expenses are deductible in my home office?
Asked Monday, November 28, 2011 by an anonymous userCPA Answer:
Expenses directly allocated to the home office such as painting the office or buying furniture for the office are 100% deductible. Other expenses indirectly incurred are deductible at a business expense allocation percentage. These would include Real estate taxes, mortgage interest, depreciation, utilities, rent, insurance, snow removal and security.
Do I lose any of my home sale exclusion if I claim a home office deduction?
Asked Monday, November 28, 2011 by an anonymous userCPA Answer:
You will not lose any of the $500,000 (married filing jointly) 250,000 (non-jointly filed return) residence sale exclusion if you previously claimed a home office deduction.
However, any depreciation taken after 5/6/97 must be recaptured at a rate of 25%.
You cannot avoid this recapture by not claiming depreciation as a deduction in a given year.
However, any depreciation taken after 5/6/97 must be recaptured at a rate of 25%.
You cannot avoid this recapture by not claiming depreciation as a deduction in a given year.
Can I deduct storage space in my basement as a home office deduction?
Asked Monday, November 28, 2011 by an anonymous userCPA Answer:
If space is used on a regular basis for the storage of inventory or sample products you can deduct home office expenses even though you use the space for personal purposes and do not meet the exclusive use test.
Can I claim home office expenses for a day care facility?
Asked Monday, November 28, 2011 by an anonymous userCPA Answer:
A person who does not meet the exclusive use requirement because the use is for a day care facility will still qualify to deduct expenses as a home office. The day care must be for children, handicapped persons or persons 65 or older. You must have a license, certificate registration or other approval as a day care center under state law.
Are my cell phone calls made while commuting to work deductible?
Asked Monday, November 14, 2011 by an anonymous userCPA Answer:
The IRS states that any cell phone calls made while commuting to work are not deductible.