School me on claiming a home office

[mommy2allie]

Lurker coming out with dumb tax questions...WARNING

So for the past five years or so I have worked part time from home and part time in our corp office about 50 miles away. (this was part of the deal when i took the job because they wanted me and were just too far away) I have never claimed a "home office" on my taxes bc i technically had an office in our corp offices. Recently I went to working full time at home and no longer have a space in our corp offices. I only go there now for monthly meetings. Which makes me think its time to claim something on my taxes.

Thoughts? everything i hear says its a nightmare!

[magdala9]

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:

1. 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.

2. 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.

For a full explanation of tax deductions for your home office refer to Publication 587, Business Use of Your Home.

link www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Home-Office-Deduction

[thatgirl2478]

Study publication 587.

Claiming a 'home office' is one of the biggest red flags to auditors.

[AAM2012]

Didn't the rules change recently too making it very hard to legitimately claim this deduction?

[mommy2allie]

I have heard that as well (about being audited) but in 2009 and 2011 I was flagged for different things (I wouldn't say audited but they sent me a random letter in August saying I owed more after their review and they were incorrect and I needed to get a tax advocate) so I think they seem to already have my number...

[aurora]

DH works exclusively from home, but our accountant told us it's really not worth bothering to claim his home office. (He said he would do it if we asked him to but that we were so likely to be audited as a result that most of his clients decline.)

Being flagged and asked to pay more is different than a full audit, which could take a huge effort on your part if they ask you to dredge up all detailed paperwork.