How to Take the Home Office Deduction

Nowadays, your office can be wherever your laptop is, but you may be unaware that having a home office can lead to tax savings. Let's explore how you can legitimately and legally claim the home office deduction without any disputes from the IRS.

One of the requirements for claiming a home office deduction is that the space must be used exclusively for business purposes. This means it cannot be your couch, bed, or kitchen island. The IRS is very strict about this!

Once you've determined you have a qualifying space, there are two major approaches to deducting a home office if you're a qualifying sole proprietor or owner of a single member LLC: using the simplified method or the actual cost method (spoiler alert, the actual cost method has the potential to save you more). Even if you're an employee of your S Corp or C Corp, you can take a home office deduction, the benefits are actually even greater this way!

What you'll hear in this episode:

[1:30] Qualifying your home office - what you can and cannot do

[5:00] If you aren't a W2 employee in your business, use this method

[7:00] The simplified method and the actual cost method

[10:00] What to do when you're a W2 employee of your business - the accountable plan

[13:00] Is the home office deduction a red flag for audit?

[14:30] What if you moved during the year?

* Related episodes:

237. Tax Tips for Short Term Rental Owners with Ryan Bakke

238. Why Your Tax Pro Says No to Creative Strategies

241. Five Key Financial Building Blocks for Your Business

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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.