The COVID-19 pandemic has immensely surprised us all. From what we thought will be a month-long lock down already became a half-year. It has paralyzed almost every affected country’s economy, bringing significant suffering to those who are already struggling beforehand. While we are not yet allowed to step foot outside of our home for safety and compliance, business owners now struggle to manage their work, especially in terms of where they will do these tasks and activities. Luckily, we can make use of our own home to be our work office. And not only that, it saves you from time and energy, but also in terms of your financial expenses.
What is the Home Office Deduction?
Home office deduction, simply put, is the deduction of expenses for the business use of your home. It is considered to be a significant tax benefit, given that you and your workplace qualify for the specific standards imposed by the government.
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Am I Qualified?
If you are self-employed, own a small business, or work from home, you may benefit from the home office deduction. However, your home office must be used regularly and only exclusively for work, with management and administrative activities only being done in the said place like billing customers, clients, or patients, ordering supplies, keeping books and records, setting up appointments, phoning customers, ordering supplies, and forwarding orders or writing reports.
It must be used for only one business and trade, and not for any other personal uses. Your home office must also be a separate and identifiable space and not with any other personal furnishings. If your job requires you to meet clients at your home, you may also be qualified for this tax benefit.
What can I Deduct?
Here below are the following deductible expenses:
- Real estate taxes
- Home mortgage interest
- Mortgage insurance premiums
- Casualty losses attributable to a federally declared disaster
Meanwhile, these are the expenses that can be deductible if you use your home for businesses:
- Casualty losses NOT attributable to a federally declared disaster
- Depreciation
- Insurance
- Rent paid for the use of property you do not own, but use in your trade or business.
- Repairs
- Security system
- Utilities and services
How can I Take it?
You must file Form 8829, and keep all the necessary records to calculate your home office deduction. If you are a sole proprietor, check Schedule C. If you are an independent contractor, check Schedule E.
You may also check IRS Publication 587 for help or consult with your tax advisor for more detailed and precise counseling. With JD Tax Accounting and Services, you are guaranteed the best. We provide a very convenient and professional service for our dear and beloved clients. In these trying times, we have advanced our customers’ goals and make sure we put their best interests at heart. Partner with us and get your home office deduction solved.
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