It’s Tax Time…Don’t Forget your Home Office Deductions!
Fast Fact: More than 30 million Americans work from home. Of those, 26 million don’t get all their tax benefits. Don’t miss out on yours!
You’ve joined the growing ranks of those who work from home, and have enjoyed the personal benefits that come with it (no more 45-minute commute!), but are you missing out on the financial benefits?
Odds are good that you are.
Of the 30 million people who work from home today, only 4 million are getting all the tax benefits available to them.
Why so few? Some fear filing for home office deductions may trigger a tax audit. But, tax experts say, working from home is so common today that it’s not really a red flag anymore. Other work-from-home taxpayers simply don’t know how to file for the benefits — or that they’re even entitled to them.
How Do I Know if I Can Take Home Office Deductions?
You’re entitled as long as your home office fits these two IRS criteria:
- Your home office must be used “regularly and exclusively” for conducting business.
- It needs to be your “principal place of business.”
If that sounds like your office, then you can deduct part of your mortgage interest, insurance, real estate taxes, and utilities based on the square footage of your office space. You can also deduct some repairs and even write off the depreciation of your home and home improvements. Use IRS Form 8829.
What If I Don’t Want to Itemize?
If you don’t want the hassle of itemizing those deductions, the IRS created a simplified method: take up to 300 square feet (the cap the IRS allows) and multiply by the dollar rate set by the IRS (today it’s $5 for a maximum deduction of $1,500). No intense paperwork required!
The IRS created Publication 587 to answer any questions you may have. Don’t forget that consulting with a qualified tax professional is always a good idea, especially if you’re still unsure of what you can and can’t deduct.