Can us bankers take the home office tax deduction for working at home?
Do any of you take the home office tax deduction for doing work at home? The reason I ask is because several of my coworkers have mentioned doing so. Their reasoning is that they take a significant amount of work home and work from home frequently. Some deduct up to 15% of their apartment (even if shared with roommates based on square footage). In NYC, this could be something to the tune of a $5,000 deduction.
I don't think this deduction is allowed and will raise serious red flags, but they said they've been doing it for years. What about you guys?
Here's the official IRS definition:
If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. The home office deduction is available for homeowners and renters, and applies to all types of homes, from apartments to mobile homes. There are two basic requirements for your home to qualify as a deduction:
- Regular and Exclusive Use.
You must regularly use part of your home exclusively for conducting business. For example, if you use an extra bedroom to run your online business, you can take a home office deduction for the extra bedroom.
- Principal Place of Your Business.
You must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers.
Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.
Additional tests for employee use. If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests discussed above plus:
Your business use must be for the convenience of your employer, and
You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.
If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.
That would be awesome. Also would like to know.
Yes because I plan to amend the last 3 years of my tax returns if so
Is it for the convienence of your employer or you? Just doing work you bring home from work doesn't qualify, that is for your convienence. If your got audited you would need your company to say that it is for their convienence. If they don't have a workplace policy on it you probably would lose. The home office deduction is a huge audit flag and unless you really qualify for it, don't do it.
If your just bringing work home to do it there because you don't want to do it all night in the office your out of luck. Remember it has to be for the convienence of the employer, not as much you.
I wouldn't take the deduction. It's not worth it.
It's a giant red flag screaming "audit me!". Also, when the IRS says exclusively for business, they mean it. Can't take a personal call in there, better not have a tv on anything other than Bloomberg/cnbc, and god help you if you have any personal stuff on your computer in there.
I have known people who have pulled it off, but do you really want to go through the hell of an audit for a few hundred?
take it, risk / return baby
Regarding the exclusivity, although the IRS says you should have separated rooms, if you claim an area of your apartment e.g. tables, filing folders then theoretically that should be OK? E.g. even for storage, where you store documents you've been working on etc. All this takes up square feet. That's the argument. Also my co-workers "say" the AC/heat/lights turn off and they HAVE to go home to work, not by choice.
FART ON YOU
you can but it will be a big risk for if / when you ever get audited
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