You work from home. You know that you are entitled to deduct your “home office expenses” but your accountant has warned you that it is very tricky, and that the deduction often raises a “red flag” for the irs or the state in reviewing your return because it is an often abused deduction. You don’t want to invite an audit and the expense of it (even if you are 100% within the law), but you are entitled to the home office deduction. What is a savvy business person to do?
The IRS feels your pain – no really, they do – and they have created a new “safe harbor” for the home office deduction. A safe harbor is an alternative to all the record keeping justifying the home office deduction. Instead, if you qualify you can deduct $5 a square foot, up to 300 square feet – or $1500. If you actually have a greater deduction calculated the old way is worth more than that, you can certainly continue to use the computer method. But, if $1500 is close or good enough, and all that record keeping can be reduced, this might be a good idea for you. After all, your job is to focus on the success of your business, not the some of the administrivia that comes with being a business owner.
If this might be of interest to you, on to the legal details….. http://bit.ly/W6Wxfr
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