I work from home, what can I deduct on taxes? what receipts do i need to keep?

Question

I work from home, what can I deduct on taxes? what receipts do i need to keep?

Answer 1

There is a formula for tax deduction for home businesses. Call your tax person for official information. I understand that only the area where you set up all business work is taxable (deductions) and any equipment, phone electric calculators, etc can be included. Check it out before trying to claim tax help.

Spartawo...

Answer 2

Do you work for an employer or do you work for yourself?

The IRS has tests to determine whether or not you can claim a home office.

If you work for an employer, the use of the home office must be at the "convenience of the employer." What this means is that your employer must not offer you office space at his location. If he has office space for you and you decline to use it, you cannot deduct home office expenses.

For both employees ad self employed individuals, the home office space must be used "exclusively and regularly for business." This means that no personal, investment or other non-business activity can be conducted in the space. For example: If you use a spare bedroom as your home office, you cannot use it for overnight guests, a place for kids to do homework, a place to pay household bills, etc. Some auditors have disallowed the home office expense because they found a dog's toy in the room.

If you meet the exclusivity and employer's convenience tests, then you may deduct home office expenses. To calculate the deduction, you first must determine the area used for business. Find out the area of the home office (it does not have to be a whole room) and the area of the total home. You use this percentage to multiply your allowable expenses to get your business expenses. Allowable expenses are: Insurance, rent, utilities, home repairs, trash removal, depreciation  etc.

Mortgage interest and real estate tax are special cases. They are used in the calculation of the office in home deduction for employees, but are deducted in full on Schedule A.

Office equipment in the office are depreciated. Make sure there are no games on the office computer. The computer in a home office is subect to listed property rules. The first telephone line into the house is not deductable although long distance business calls can be deducted. A dedicated business line (after the first line) is deductable.

Answer 3

Why are you working from home?

What do you do?

Keep all receipts for anything connected with the business, but let a trained preparer sort it out.  (Don't use just any preparer, find someone who is an enrolled agent.)  

Answer 4

You can deduct business expenses.  You may use a room in your home as an office, but it must be used primarily as an office.  You can deduct any business usage of your computer and any business supplies.  You may not deduct personal or entertainment expenses that are not business related.