Do You Claim a Home Office on Your Taxes?

[jrstephens]

Here is another poll.

 

[sarahmarie]

my office is in my bedroom. I am not allowed to claim that, correct?

 

[jrstephens]

That is what I would love to know! b/c my office is in a bedroom too.

 

[lacychef]

I don't have a technical "office", but my tax preparer just lets me use 1/6 of our house square footage, plus 1/6 of the utilities. Since I do most work from home, he says it's okay.

 

[cmdtrgd]

I have a place where I do PC, but that is not all I do. I claim to work at home so I can claim the mileage. I do not claim anything else when it comes to a home office.

 

[chefjeanine]

I've heard that claiming a home office (utilities and such) is one of the quickest ways to draw attention to yourself and be audited. Anyone else ever heard this? Even though I don't do anything illegal (that I'm aware of), I have no desire to meet wht an IRS agent and try to explain my business.

 

[Jennie4PC]

I dont claim my office I talked to a lady who does taxes and she said you have to use it exclusively for your business and you cant have anything else in it so if I got audited I would have to remove all the school and church books we have in our office

 

[gratergirl]

Before Pampered Chef, we had an engraving business that was handed down from my parents....they had it for 15 years and we had it for about 7. We moved 5 years ago to a development so decided to let it go. We used to live in a commercial area so it was great. But anyway, before we dissoved the business....we always could write off part of the utilities, the second phone line, part of the cable bill since I run my email through that amongst other things. We never got asked any questions and neither did my parents when they had it. (knock on wood!) HTH

 

[lisacb77]

Hey all, check this out from the IRS publication. If I'm reading it right, because we keep product samples on hand (starter kit etc) we don't have to meet the exclusive use to establish office space in our home.

So I think that means ppl like me using part of their office could still establish their home as place of biz:

"Exceptions to Exclusive Use
You do not have to meet the exclusive use test if either of the following applies.

You use part of your home for the storage of inventory or product samples (discussed next).

You use part of your home as a daycare facility, discussed later under Daycare Facility.

Storage of inventory or product samples. If you use part of your home for storage of inventory or product samples, you can claim expenses for the business use of your home without meeting the exclusive use test. However, you must meet all the following tests.
You sell products at wholesale or retail as your trade or business. (yep!)

You keep the inventory or product samples in your home for use in your trade or business. (yep, I have PC products galore! and door prizes are samples/inventory too IMHO)

Your home is the only fixed location of your trade or business. (yes! b/c the host's homes keep changing, they are not fixed!)

You use the storage space on a regular basis. (but of course)

The space you use is a separately identifiable space suitable for storage. (yes, you can clearly tell my filing cabinets and big red crate are storing PC stuff!)"

 

[lisacb77]

So my vote is that I plan to claim the office, but for the sole purpose of claiming mileage. I'm not writing off utilities, but I will write off the % of my cell bill dedicated to PC calls.

 

[Grandmarita]

Lisa, can you give us the Booklet # you are quoting from, so that we can order a copy, or give us the website that we can order it from? I'd like to
have a copy to show my DH, who is tougher on my than the IRS would be. I know it is for our own good, not to invite an audit. He is like this with my Charitable deductions when I donate clothing and household items too.

Fortunately, the person who recruited me is a tax preparer, and she looked at my returns last year. I read someplace, but not sure where, that if you stopped at a grocery store on the way to a party, you could claim the mileage from the store to the party, since you had "done your commute between your house and the store". I suppose you'd need the grocery receipt to prove it, if you did get audited. I had one show that was 100 miles from my home. Naturally, I want to claim those 200 miles round trip.
Can anyone blame me? I'd like HO to give us some guidelines on items like this. None of us want to get "caught" taking risky deductions, and have it
published and ruin the PC reputation.

 

[lisacb77]

Not a problem Grandmarita. It's #587 and here's the link:
http://www.irs.gov/publications/p587/index.html

I thought it was interesting that HO was the one to tell us not to claim it in CN, but I guess everyone has their own cases. I also think it's ironic. If it's a home business where else would be your primary location??

 

[maryhenderlite]

I've heard that claiming a home office (utilities and such) is one of the quickest ways to draw attention to yourself and be audited. Anyone else ever heard this? Even though I don't do anything illegal (that I'm aware of), I have no desire to meet wht an IRS agent and try to explain my business.

My mother is an accountant (for 27+years) and swears this is true.. There are alot of deductions you can take without claiming to have a home office. She says that is the quickest way to be red flagged. We have 2 business (trucking company my pampered chef) we claim alot of different stuff, mileage, office supplies, cell phones, he gets a per diem per day for food and what nots... but do not use the home office or a % of house and utilities. Just my 2 cents.

 

[lisacb77]

Mary, do you still claim mileage to and from cooking shows w/out a home office? That is the only reason I would do it.

 

[beepampered]

You give me a lot to think about. I claimed a home office last year and was planning on it this year. My desk with computer is exclusively PC so I figured something like five square feet; half the cable (high speed internet) and long-distance calls for PC (but not local since I would do that anyway). Perhaps I need to rethink it.

 

[chefjeanine]

My mother is an accountant (for 27+years) and swears this is true.. There are alot of deductions you can take without claiming to have a home office. She says that is the quickest way to be red flagged. We have 2 business (trucking company my pampered chef) we claim alot of different stuff, mileage, office supplies, cell phones, he gets a per diem per day for food and what nots... but do not use the home office or a % of house and utilities. Just my 2 cents.

Mary,

Thanks for that information. We do claim all that other stuff (and more) but I'm just not willing to chance the "home office" expense.

 

[toneybug]

My husband & I have just started a plumbing business and I'm doing everything from home. My understanding is that you can claim a home office if you use that room for office use only. This means no bed, tv etc., my room has a futon that's used as a couch for clients. You have to use that room primairly as an office. You can deduct using a formula from IRS website. Square footage of your entire house divided by square footage of your office and this will give you the % to use to write off taxes, utilities, internet service (for your email account) mortgage etc. I am no tax attorney by any means but you can always call the IRS toll free and they will answer your questions and you don't have to give them any info about yourself. I've done this several times.

 

[pamperedgirl3]

Our friend who is also our accountant told us he's not going to have us claim my home office on the taxes. I guess they recently changed the laws & if you claim a home office & sell your house, you have to pay extra taxes b/c of the office. So he said if you save now, you'll pay later--or you pay now & save later!

 

[KYCHEF]

What about your vehicle? Someone told me that if I have a PC sticker on my car that I can write off the taxes I pay on it because its advertising. Anybody know anything about that???

 

[KYCHEF]

Anyone have an answer?

 

[SilverCeladon]

I'm interested in the car answer also. I'll put stickers all over my car if it's for tax purposes!

 

[Tara1021]

We claim a home office b/c my husband is self employed. Since i started pc, i now have a corner of it too! :0)