Do you have a small business? Do you use a part of your home regularly and exclusively for business purposes?
If so, you may be able to take a home office deduction.
Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly as your principal place of business, or as a place to meet or deal with patients, clients or customers in the normal course of your business.
A separate, detached structure such as a garage or guesthouse that is used regularly and exclusively for business also may qualify as a home office.
The amount you can deduct depends on the percentage of your home used for business. And, your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.
There are special rules for qualified daycare providers and for persons storing business inventory or product samples.
Different rules apply for claiming the home office deduction if you are an employee. For example, the regular and exclusive business use must be for the convenience of your employer.
The home office deduction got a bad name because abuse in the past caused the IRS to deny many deductions.
However, if your home office meets the regularly and exclusively test, and your office is the base of your small business operations, I recommend taking advantage of this deduction.
Want additional documentation to support your home office deduction? Take digital pictures or video clips of your home office showing your exclusive use of the area. A picture can be worth a thousand words.
