January 27, 2015
Donald Zidik, Tax & Business Services Director, Featured in U.S. News & World Report Article, "Tax Prep: Demystifying the Home Office Deduction."
By Molly McCluskey
It's the sexiest and scariest of deductions, and it's often shrouded in mystery. It's the home office deduction, and rumors abound about who qualifies, how it's calculated and whether taking it automatically flags an IRS audit.
Unlike more obvious deductions, many people aren't sure if they qualify to take the home office deduction. But with the large number of American small businesses based out of an owner's home – including more than half of all small businesses, according to the Small Business Administration – those who qualify shouldn't hesitate to claim the home office deduction.
According to the IRS, a portion of your house might be considered a legitimate home office if it meets a few requirements: It's your primary workplace (i.e., you don't have a separate office space that you are required to attend from 9 to 5 every day); it's used exclusively for work; you regularly meet with clients there; and/or you have a place such as a garage that you use to store work-related supplies.
"The simplified option is just that – an option, and it can be more convenient to take it than to calculate all your expenses over the course of the year," says Don Zidik, a CPA in Needham, Massachusetts. "It's a more common-sense way of calculating."