Small Business Accounting:
Saving Taxes with the Home Office
To claim deduction for business you run out of your home you must meet the following criteria:
- The part of the home that you use for the business must be exclusive, meaning you can't use it as a home office by the day and a child's bedroom by night. An exception to this rule is if you use this part of the home for a day care center or as storage space for the products you sell. The requirements for the storage space are the following:
1.It's the only place you keep these products because the space that they are in is suited for it. This means you cannot keep television monitors you sell under the sink and then claim the space for a deduction. You should keep all these products in a suitable storage area.
2.Your home is the only place you keep these products, meaning you do not store it elsewhere outside the home.
3.You use this space regularly.
4.You are in the business of selling
- You use this space regularly to conduct your business or dealings with clients.
- It is used for business or trade that you are skilled in.
Your home office should be used for one of the following:
- Sole place of business or
- Sole place of business meetings, dealings with patients, and clients concerning your trade or business
- A separate room or building not attached to your house that you use for your business or trade.
Use should use IRS Form 8829, Expenses for Business Use of Your Home, to claim deductions related to home office usage.