However, the withdrawal requirements, you need to consider your home office on taxes this year before claiming.
Here is a summary of these potentially valuable deduction, and you need to know about the IRS definition of "home office".
What is the deduction of home office?
If you use part of your home for business, home office deduction is designed so that you deduct expenses for the business use of your home related.
There are two ways to calculate the home office deduction - Simplified and regular methods. simplified method of deduction based on the area of the home office, instead of the actual costs associated with space. From fiscal 2016 allows this option to a deduction of $ 5 per square foot, up to a desktop size of 300 square meters, so a maximum deduction of $ 1,500.
On the other hand, is the usual method for the Home - Office - deduction in the calculation of the actual expenditure incurred during the year add. This includes the money on the desktop itself (such as the repair of the system) and a pro rata share of the costs of the entire house to keep spending, including, but not limited to:
- mortgage
- leasing
- Homeowners Insurance
- property taxes
- Utilities (electricity, water, gas, sewage, garbage)
- services pest Control
- Repairs throughout the house (a new roof, for example)
- depreciation
For example, say a room of 150 square meters in a 1500 square-foot house as your office use at home. Since this represents 10% of the area of the house, you can deduct the amount of the cost of the house. Here is an example of how it might work:
In this case, would be the regular method in a deduction of $ 1,800, well above the $ 750, which would be entitled to the simplified option. So while the normal option relates much more work on your part, it is interesting both methods to try to see what has in the larger deduction result.
Two essential conditions
The home office deduction can be very useful, but the IRS has accurate picture of what a home office definition applies. To qualify, you must meet two basic requirements.
First, the portion of your home used to the Home - Office - deduction for the calculation must be used regularly and exclusively for business. In other words, the space not only can sometimes be used as a desktop. For example, if you have an installed in an open-plan office is used as a guest room, it is not only used as an office, so you might not get.
As you can imagine, these two requirements have a gray area. What if half the space used in a room exclusively for companies, while the other half has a different purpose, such as a playroom for your children? Would you come for a withdrawal into consideration? The answer is "it depends."
Finally, the request must be the office "part of your house," is not a separate bedroom. He even says in IRS Publication 587, "The room must not be marked by a permanent partition," "to be individually identifiable" only.
The point is that, like many other tax questions, the Home-office deduction on a list of requirements is not subject in stone mood, but the criteria somewhat open to interpretation. Use your best judgment to decide if you qualify, consult a tax professional if you are unsure.
It is from - Qualification
As you can imagine, the home office deduction is relatively easy to abuse, whether intentional or not. a deduction of home office chances assert increased significantly on a test - For this reason, the IRS tends to pay attention.
Now I am not do not say that should say if you have a legitimate home office. Otherwise, you should never be afraid of a test you can prevent taking of any deductions to which you are entitled. Rather, what I am saying is that the deduction claimed before, you must be sure that your home office meets the requirements, and can prove it.
Read the original article in The Motley Fool. Copyright 2016 The Motley Fool Follow on Twitter.
No comments:
Post a Comment