Date: September 22, 2021
The Urban Legend Of Tax Deductions
With the pandemic, many business owners are working from home more than ever before. You may have heard the urban legend of the ‘Home Office Deduction’. A lot of people we speak with seem to think that if they take the Home Office Deduction that they will get audited.
THIS IS INCORRECT
Millions upon millions of business owners claim the deduction every year without being audited. As long as you do it CORRECTLY you have nothing to worry about. So, how do you do it right?
The home office has to be used “exclusively and regularly for your trade or business”, meaning you have a separate area of the home that is used ONLY for business activities (like an actual home office…)
If you do not legitimately have an actual office in your home, you can designate a particular area to serve as your ‘office’ and still get the deduction without any strife from the IRS, assuming you’re only doing business in it.
The deduction is calculated by dividing your total ‘office’ square footage by the ‘total’ square footage of the home to get a ratio, then multiplying that ratio by the total costs to maintain the home (think lawn care, cleaning, repairs, upkeep, utilities, rent, mortgage, etc). Those costs can add up and there’s no other way you’re able to get any tax benefit for those dollars you’ll pay every single year, unless you utilize the strategies and opportunities that you’re legally entitled to use.
We would love to help you maximize your deductions and eliminate your fear of being audited. To claim a complimentary tax assessment just click here to book a call.