Business matters
• As a place to meet or deal with clients in the normal course of your business, or in the case of a separate structure which is not attached to your home, it must be used in connection with your trade or business.
2. Generally, the amount you can deduct depends on the percentage of your home that you use for business. A common method of allocating percentage is based on square footage but any reasonable method is usually acceptable. Your deduction may be limited if the gross income from your business is less than your total business expenses. 3. If you sell your house, the depreciation taken for your home office will be subject to taxation. 4. If you are self-employed and file using Schedule F, use the worksheet in Publication 587 to calculate the deduction and report the deduction on Schedule F. If you use Schedule C, use Form 8829, Expenses for Business Use
Home, Sweet Home (Office Deduction) By Carol Gordon, CPA
of your Home, to calculate the deduction and report the deduction on Schedule C. 5. The home office deduction is also available to renters. 6. If you are an employee and work from home, you are no longer eligible to claim the home office deduction.
People don’t always understand what’s available and especially that selling your house generally results in paying taxes on the depreciation you’ve claimed over the years. Many of you use a home office as the home
taking the deduction would be beneficial to
base for your business. You make appoint-
your business.
ments, pay bills and make bank deposits at home. The IRS offers qualified taxpayers
Here are six important things to know about
the opportunity to deduct the expenses of
claiming the home office deduction.
maintaining a home office from your taxable income. I’ve included some very basic infor-
1. Generally, in order to claim a business de-
mation on this topic here. Please review IRS
duction for your home, you must use part
Publication 587 and discuss this option with
of your home “exclusively and regularly”:
your financial advisor in order to decide if
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Winter 2020/21 | Riding Instructor
• As your principal place of business, or
For more information, see IRS Publication 587, Business Use of your Home.
About the author: Carol Gordon is a CPA with an MBA from Boston College and the owner of Carol Gordon, CPA, which provides consulting services to equine-based businesses. You can contact her at cgordoncpa@gmail.com. If you have any questions that you’d like covered here, please email her with your suggestions.
