In our modern and technologically advanced society, one could virtually work anywhere without being physically in an actual formal office setting, especially one could work at home, it sure saves money and wear/tear on a person’s vehicle.  So, if someone decides to work from home, can a person claim the use of one’s home as a tax deduction?

The use of a person’s home for business purposes is indeed a tax deduction, however, just like every other deduction, and/or tax credit in the federal tax code, there are certain criteria that has to be meet, in order to sustain such a deduction.  First of all, a certain area of home must be used exclusively, which is an absolute 100%, for business purposes.  Second, the designated area of the home is used as the principal place to conduct one’s business, which includes any administrative and/or management activities that is needed for the business.  For most self-employed individuals, this criteria is easily met, because one could easily designate a certain area of the home conduct one’s self-employed business (with at least a one-bedroom apartment), even though he/she goes to place-to-place to conduct business with his/her clients/customers.  Furthermore, for the self-employed, the home office deduction would be an expense against gross self-employment income.  However, for the employee, there is a third criterion to be met.  The employee who sets up a designated area of his/her home, so he/she can work for his home, it must be for the employer’s convenience rather than for the employee’s convenience.  The classic case is when employer is do not have any room and/or a desk at the regular office for the employee to operate from, and thusly the only choice that the employee has is to work from home.  Furthermore some parts of the home office deduction for the employee, would be unreimbursed employee expenses, which needs to be at least 2% of one’s total income in order to be claimed as an itemizeable tax deduction.

So, if you do work from home for most of the time, and you think you do have a home office to claim as a tax deduction, please let us know at [email protected], we can help you to determine if you have a deductible home office, or even what steps that need to be taken in order to have a sustainable home office deduction. We can help you with all you tax and bookkeeping issues and questions.