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The home office deduction is a tax deduction almost anyone can take advantage of, especially post-COVID’s work-from-home movement. There's a lot of confusion among business owners thinking that the home office deduction is an IRS red flag, but in this episode, we set the record straight. We talk about this deduction, who can qualify for it, and everything you need to know.
[01:02] What Qualifies As A Home Office?
- The home office deduction is not a red flag, as long as you're doing it properly
- A home office is used exclusively for business and on a regular basis
- It is a principal place of business that is used to meet clients or is used to do administrative or management work
[04:34] How To Calculate the Home Office Deduction
- The simplified option: Standard deduction of $5 per square foot of home used for business (maximum 300 square feet)
- The actual method: Your BUP multiplied by all the expenses associated with that home
[09:17] Where Do You Claim The Home Office Deduction?
[10:40] Final Thoughts on How the Home Office Deduction Works
- It’s not an audit risk if you do it properly
- To help prove your deduction, keep a log and take photos to record the business use of that home office
- Bonus tip: A home office increases the amount of business mileage you can take
Key Quotes
“The home office deduction is not a red flag as long as you're doing it properly. Actually, the home office deduction is something that the majority of business owners should take advantage of.” – Mike Jesowshek
“A home office deduction is not an audit risk as long as you're doing it right. Just don't get greedy. Make sure you document the necessary items to support your deduction.” – Mike Jesowshek
Resources Mentioned
- Blog Mentioned - Accountable Plan Importance (Expense Reimbursement): https://www.taxsavingspodcast.com/blog/what-is-an-accountable-plan-and-why-is-it-important-to-my-business
- Article: https://www.taxsavingspodcast.com/blog/how-does-the-home-office-deduction-work
- Join Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
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To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a call at 844-327-9272 or send your questions to us at: Ask@TaxSavingsPodcast.com
Small Business Tax Savings Podcast