How rigid is the Exclusive Business Use of Home Office test

Question

Does this rule mean I may never use my home office for anything personal? No personal calls, emails, financial records, books, etc - and nothing not related to the business on the computer in this home office?

If this is the case, how does anyone meet such a stringent test - or do they?

I've read the IRS publications

(I will be doing PT accounting/admin an Independent Contractor).

Thanks in advance.

1 day ago - 6 days left to answer.

Additional Details

13 hours ago

Any answers are appreciated.

Answer 1

Home office deductions are highly audited as they are the most abused. If you have games on your office computer you can lose the deduction. You can still deduct your supplies and everything. If you own your home you might want to depreciate as part of the business but I would recommend you do not. You would have to stay in that home for 40year until after it is fully depreciated or you have to add back in all the depreciation deductions when you sell it.

Answer 2

Personally, unless I was renting, I'd intentionally make sure that I couldn't take the deduction.

Many expenses are already deductible; depreciation has to be paid back when you sell and it's the attempt to deduct most of their utilities that gets people nailed in an audit.

Answer 3

Very Rigid.

There was case years ago of someone who had their entire home office deduction disallowed because they kept stock trade information in one of the desk drawers.  The IRS uses this case as an example on the EA exam.

There is also one urban legend that I read on another message board. A taxpayer took pictures of their home office to show the IRS during an audit. One of the pictures showed a dog's toy in the middle of the room. The auditor disallowed the entire home office.

Bottom Line: "Exclusively" means exclusively or 100%. Not 90% of the time. Not even 99% of the time. 100% of the time.

Answer 4

Technically yes, that's what it means.  I suppose that if in the year you sat at your desk and wrote one personal check, nobody would care much.  But if you are as in your example using the computer for both business and personal use, the area would not qualify for a home office deduction.

Answer 5

Yes, I've read them too, and I don't bother to deduct my home office.

It's not worth the hassle.  I understand that home office deductions disproportionately attract audits, too.