A tax deduction for using your home and/or home office in trade or business sounds very simple at first, but many soon realize that calculating these expenses can be quite tricky. The Internal Revenue Service (IRS) provides stringent guidelines to determine whether your office even qualifies for this deduction. The following will explain the basics for determining if your home office qualifies for the business use deduction.
The Home Office Deduction
The IRS has requirements that a home office must have in order to qualify for the home office deduction: (1) Regular and Exclusive Use and (2) Principal Place of Business (3) In Connection with Trade or Business (4) Regular Storage Use. 오피
Regular and Exclusive Use: Regular and Exclusive Use simply means that the home office must be used on a regular basis and exclusively for the use of business and trade. A specific portion of your home must be set aside for business purposes only, but this area does not need to be portioned off or separated. An office that is used for both business and personal reasons does not qualify for the deduction. For example, if you have a home office that your children also use to play and study your office would not qualify. Simply using your home on occasion would not qualify for the deduction under the Regular Use test.
Principal Place of Business: To qualify for the deduction under the Principal Place of Business Test the home office must be used regularly and only for management and activities related to your business. There should also be no other location where regular office works, including: billing and invoicing, bookkeeping, and appointment setting, is conducted. If you use the home office to substantially conduct management activities for multiple businesses, you also qualify for the deduction under the Principal Place of Business test.
In Connection with Trade or Business: Deductions for expenses involving separate structures not connected to your home also qualify for the deduction if these structures are used in connection with business activities. Examples of separate structures include: studios, greenhouses, garages and barns. The separate structure does not have to meet the Principal Place of Business test but it must be used regularly and exclusively for business.
Regular Storage Use: If part of your homes is used to store inventory or product samples, then you can deduct expenses of all of the following conditions are met.