If you use part of your home for your business, the IRS has some new guidelines that may help claim this deduction.
Here are six facts that the IRS has determined to qualify you for the home office deduction:
1. You must use a part of your home exclusively and regularly for business purposes. The part of your home used for business must also be:
2. Your principal place of business, or
3. A place where you meet with patients, clients or customers in the normal course of your business, or
4. A separate structure not attached to your home, such as a studio, workshop, garage or barn. In this case, the structure does not have to be your principal place of business or a place you meet clients or customers.
5. You do not have to meet the exclusive use test if you use part of your home to store inventory or product samples. The exclusive use test also does not apply if you use part of your home as a daycare facility.
6. The home deduction may include part of certain costs that you paid for having a home -- such as rent or allowable mortgage interest, real estate taxes, and utilities. The amount you can deduct usually depends on the percentage of the home used for business.
The deduction for some expenses is limited to your gross income from the business use of your home is less than total business expenses. In other words, you cannot take a home deduction for that year if there is a business loss.
Administrative or management activities performed at other locations may not necessarily disqualify the use of your home for the home office deduction. If for example, you have another company do your billing from its place of business.
The same home office can be the principal place of business for two or more separate business activities, but it is necessary to determine each area separately.
For more information go to www.irs.gov and type Business Use of Home into the search engine.
Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or at firstname.lastname@example.org.