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Can I Claim Home Office Deductions on My 2018 Tax Return?

Can I Claim Home Office Deductions on My 2018 Tax Return?

If you’re self-employed and use part of your home for your business, you can deduct home office business expenses against your self-employment income. The deduction applies to all types of homes and is available if to you if you are a homeowner or renter.

If you’re self-employed and use part of your home for your business, you can deduct home office business expenses against your self-employment income. The deduction applies to all types of homes and is available if to you if you are a homeowner or renter.

A business expense is any expense made when running a business or trade. You can deduct the expenses if the main purpose of the business is to make a profit. 

A business expense is any expense made when running a business or trade. You can deduct the expenses if the main purpose of the business is to make a profit. 

In order to claim expenses for business use of your home, you must use part of your home for one of the following situations: 

In order to claim expenses for business use of your home, you must use part of your home for one of the following situations: 

There are two ways that you can calculate the business percentage of your home eligible for a tax deduction:

There are two ways that you can calculate the business percentage of your home eligible for a tax deduction:

The IRS allows for any reasonable method of determination when calculating the business percentage of your home. However, you cannot make deductions on the business designated portion of your home for parts of the year that business area was not in use.

The IRS allows for any reasonable method of determination when calculating the business percentage of your home. However, you cannot make deductions on the business designated portion of your home for parts of the year that business area was not in use.

The deduction limit for the business use of your home is dependent on the gross income of the business primarily used in your home. See IRS Publication 587-Business Use of Your Home for more details.

The deduction limit for the business use of your home is dependent on the gross income of the business primarily used in your home. See IRS Publication 587-Business Use of Your Home for more details.

You may carryover the deductions to the next year. In most cases, you cannot deduct expenses that are related to tax-exempt allowances. 

You may carryover the deductions to the next year. In most cases, you cannot deduct expenses that are related to tax-exempt allowances. 

General tax deductible home expenses include:

General tax deductible home expenses include:

You can deduct the following home business expenses:

You can deduct the following home business expenses:

If you are renting your home for business purposes, you can deduct part of the rent you pay on your tax return. 

If you are renting your home for business purposes, you can deduct part of the rent you pay on your tax return. 

You may be eligible to deduct your furniture or equipment (such as a computer for personal use). The equipment must past the more-than-50% test in order to be eligible for a deduction.

You may be eligible to deduct your furniture or equipment (such as a computer for personal use). The equipment must past the more-than-50% test in order to be eligible for a deduction.

You meet the more-than-50% test if you use the equipment at least 50% of the time for your business.

You meet the more-than-50% test if you use the equipment at least 50% of the time for your business.

You may deduct property that meets the following two requirements:

You may deduct property that meets the following two requirements:

You must file Form 4562 to claim a depreciation or section 179 deduction.

You must file Form 4562 to claim a depreciation or section 179 deduction.

There are specific rules for deducting the operating expenses of a daycare facility out of your home. For further information, please refer to IRS Publication 587-Business Use of Your Home.

There are specific rules for deducting the operating expenses of a daycare facility out of your home. For further information, please refer to IRS Publication 587-Business Use of Your Home.

Note: You cannot take any depreciation or section 179 deduction for listed property without adequate records.

Note: You cannot take any depreciation or section 179 deduction for listed property without adequate records.

You will have to use a separate method for determining depreciation. You must first determine: 

You will have to use a separate method for determining depreciation. You must first determine: 

Deduct business expenses not for the use of your home, including, but not limited to:

Deduct business expenses not for the use of your home, including, but not limited to:

Tax tip: these expenses are not for the use of your home, so they are not subject to the deduction limit for business use of the home expenses.

Tax tip: these expenses are not for the use of your home, so they are not subject to the deduction limit for business use of the home expenses.

Here are other things to consider when deducting expenses for the business use of your home: 

Here are other things to consider when deducting expenses for the business use of your home: 

Whether or not your business is home-based, there are certain tax advantages to employing one (or more) of your children. If you operate a sole proprietorship (or partnership with the other parent of the child) and as long as your child is under the age of 18, payments for their services are not subject to social security or Medicare tax withholding. If your child is under the age of 21, payments are not subject to FUTA (Federal Unemployment Tax Act) tax withholding.

Whether or not your business is home-based, there are certain tax advantages to employing one (or more) of your children. If you operate a sole proprietorship (or partnership with the other parent of the child) and as long as your child is under the age of 18, payments for their services are not subject to social security or Medicare tax withholding. If your child is under the age of 21, payments are not subject to FUTA (Federal Unemployment Tax Act) tax withholding.

See additional information about using your home as a place of business.

See additional information about using your home as a place of business.

Learn about other tax deductions you may qualify to claim on your federal income tax return.

Learn about other tax deductions you may qualify to claim on your federal income tax return.

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