Todd talked about homeowner tax deductions on last week's show and here's one about home offices: Home-Office Expense Deduction: If you're self-employed and work at home, you might be able to deduct expenses for the business use of your home. The home-office deduction is available for homeowners and renters, and it doesn't matter what type of home you have. The key to the home-office deduction is to use part of your home regularly and exclusively for your money-making endeavor. If that’s the case then part of your utility bills, insurance costs, general repairs and other home expenses can be deducted against your business income. You can also write off part of your rent or, if you own your home, depreciation.
There are two ways to calculate the deduction. Under the "actual expense" method, you essentially multiply the expenses of operating your home by the percentage of your home devoted to business use. The problem with this method is that it can be a nightmare pulling together all the records you'll need to calculate and substantiate the deduction. If you use the "simplified" method, you deduct $5 for every square foot of space in your home used for a qualified business purpose. For example, if you have a 300-square-foot home office (the maximum size allowed for this method), your deduction is $1,500. And just to clarify: Employees who work remotely can't deduct the costs of maintaining a home office (that includes employees working from home during the pandemic). If you have a question or concern call 320 679 5183.
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