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  • Writer's pictureAustinTaxCPAs

Tax IQ: Home Office Deduction

Updated: Dec 4, 2022

Time to clear up some common home office misconceptions!


The path to the home office deduction has pitfalls to avoid and hurdles to be cleared!


A home office deduction is similar to a marble labyrinth


 

Part I: Requirements

#1The home office must be used exclusively for business purposes.

🐣 Basics

♠️ All-Or-Nothing

🤏🏻 Some de minimis personal use is allowed, but not much

😖 Don't confuse minimal use & de minimis use

📸 Visual

🙋🏻‍♂️ Exception #1: Storage of Inventory or Product Samples


#2 The home office must be used regularly.

🐣 Basics

👩🏻‍⚖️ Tax Court Case Results

🚨 Beware!


#3 Four types of home office spaces


🏠 Principal Place of Business

🤝🏻 Physical Meet & Greet

🏢 Separate, Detached Structure

📦 Storage of Inventory or Product Samples


 


Part II: All is Not Lost

You might be discouraged into thinking that the home office deduction is not obtainable, but there are aspects that can work for the taxpayer.


#4 'Principal Place of Business' Home Office is Extra Special

🎒 Why it is extra special

🚗 Commuting miles 101

😄 Result

🚗🚗 Additional miles

#5 A Tiny Office is Okay

⬇️ Small Space, ⬆️ Big Deductions

🚫 No Walls Needed

🤏🏻 You Can Have a One-Square-Foot Office

🚨Most Important Takeaway

#6 A Second Work Area is Beneficial

🙌🏻 Supports Your Case

👨🏻‍💼 Change Your Behavior

#7 Three Methods to Calculate Office Space

1️⃣ Method #1: Square footage

2️⃣ Method #2: Number of Rooms

3️⃣ Method #3: Net-Square-Footage Method


#8 What is Deductible?

📃 List of Home Office Deductions

🔍 Fine Print

🌱 Special Note About Lawncare


 

Part III: Speical Situations



#9 More Than One Business

🥈Second Business

🧑🏼‍🤝‍🧑🏾Spouse Invasion

🏫 Planning Tip

#10 S Corporation Employees

🏢Additional Requirement: Convenience-of-the-Employer Rule

🏫 Planning Tips

What Not To Do

Best Method



















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