Home Office Tax Deduction??

NewlywedInNewYork · February 2011

We currently rent and I would like to upgrade to a larger apartment (with an extra bedroom) to use as a home office and take the tax deduction for it. It would be totally legitimate as I do have a business that I am currently running out of my bedroom (!) and am feeling a little pressed for space. I would not keep anything in the room that is not business related, would have the separate room for it, etc. My husband is freaking out saying that taking a tax deduction on a home office makes it sooo much more likely that you will get audited, it's not worth the risk, etc. Is it true that it makes it exponentially more likely that we will get audited? And, secondly, would it really be all that bad if I DID get audited considering that I am not doing anything illegal or wrong? I get that it would be a pain, but a big enough pain that we shouldn't take the deduction when we could benefit from it? Has anyone done this? Thanks!

marciejbee · February 2011

I run a business out of my home and it's only an 8% deduction on the whole house. You can also claim your utilities for that portion of the house *the same percentage as the room size. it does NOT mean you will get audited, as long as you are following the rules for a home office. I don't think it's a big deal at all. This is the 4th year in a row I have claimed my home office - as I should - I exclusively work frmo home. In addition, you can claim any business reltaed expenses, mileage that you drive your car for the business, etc. Just make sure you keep really good records. As far as the home office goes though, it's not a HUGE deduction, but everything helps.

I say if it's a legit business, you should claim it.

Wishin986 · February 2011

The home office deduction is a great option. As long as you only use that extra bedroom for a home office then you should have no problems, even if you do happen to get audited. You just have to make sure that room is used solely for business purposes. That's the main concern when people use the home office tax deduction. Especially if it's not a huge percentage of your rent, I doubt you would get audited.

GildedIcon · February 2011

Please have your accountant review this from all angles there are pluses and minuses to the home office deduct.

I used to work out of my home exclusively, and it was not worth to claim to home office BUT there where a hundred other deductions I could benefit from. As the previous poster mentioned keep meticulous records!

Talk to your acct. ASAP so that you can start now while it is still early in the year.

Home Office Tax Deduction??

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