If you are operating your business out of your home, even in a rental, you may qualify for a tax deduction. To qualify as a home office, the space must be used regularly and exclusively for conducting business, and you must be able to show that your home is the principal place of business. However, even if you work from another location, if you use a portion of your home to regularly conduct business, you may still qualify for the deduction. You may also qualify if you are employed by another, but work from home.
“Regularly” means that the space is used for the normal course of business. Having a meeting in the space once a month or so would not qualify as “regular.” “Exclusive” means that the space is used for the business purpose alone.
A “home office,” according to the IRS, may be inside a house, apartment, RV, barn, garage, etc. To determine the amount of the deduction for which you qualify, the IRS provides a formula: the size of your office in square feet divided by the size of your home in square feet. Other expenses related to conducting business in your home, such as utilities, may also be deducted. Transportation costs from your home office to another business location are deductible as well.
Special rules apply if your business is a daycare center, or if your home is a storage facility for products. For example, your business would have to be conducted regularly, but the space need not be exclusive.
Form 8829 calculates the Home Office Deduction which is applied to Form 1040 Schedule C. For more information regarding the Home Office Deduction from the IRS, click here.
If you are setting up or operating a business from home, contact an experienced tax professional and business attorney. These professionals can help to properly advise you of your tax and legal options as you build your business. Call Bellavia Blatt, PC at (516) 873-3000 or (631) 224-7000.