Home Office Deductions

You may deduct the expenses of maintaining a home office if the space is used exclusively and regularly for business. You do not have to be the owner of the business for which you are working while in your home office. Also the office does not have to be a separate and definitive room. The methodology for calculating the home office deduction changed effective with the tax year 2013. See below for how to determine your home office deduction.

2012 and Prior Years

Determine the square footage of your home office space. Divide that by the total square footage of your home. This is your home office percentage. Apply that percentage to the following items, as applicable. Use IRS Form 8829. CAUTION: If you are including home mortgage interest and real estate taxes in your Itemized Deductions on Schedule A, do NOT include those items here.
• Insurance
• Rent
• Repairs & Maintenance – NOTE: Any expenses that were incurred exclusively for the office space may be fully deducted.
     For example, paint, shelving, carpet, etc.
• Utilities
• Casualty Losses
• Deductible mortgage interest (only if NOT already included on Schedule A Itemized Deductions)
• Real Estate Taxes (only if NOT already included on Schedule A Itemized Deductions)

2013 and Later Years

Multiply the square footage of your home office space by $5. This is your home office deduction. The deduction is limited to 300 square feet or $1500.

Alternatively, taxpayers may use the same method described above for 2012 and prior years if it results in a larger deduction.

Deborah Fleischman, CPA PLLC   •   Holly Springs, NC   •   (919) 434-5409   •   Deborah@FleischmanCPA.com

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