Tax time is coming up, and you might be scrambling to prepare and file your income taxes for this year. Before you file your taxes, make sure you've maximized your income tax refund with the home office deduction. Here's how to qualify:
1. You must regularly and exclusively use your home office space for your business. This portion of your house, whether it is an entire room or a nook in the living room, must be solely used for business purposes.
2. Your home must be the principal place of your business. If the IRS audits you, be prepared to prove that your home office is home base for your work. Even if you meet with clients outside your home office, you can still be eligible for the deduction.
An auxiliary structure, such as a barn, shed or garage, can be used as your home office. It must be regularly used for business, but it doesn't have to be the principal place of your business.
If you are eligible, the home office deduction is calculated according to the portion of your home used for business. For instance, if your home office takes up 10 percent of the total square footage of your home, then you will take the deduction based on 10 percent of utilities, mortgage/rent, etc. Need to see a full list of expenses allowed for the home office deduction? Visit the IRS website for details.
- Heather Hawkins, 2014