As you sit in your home office preparing your business taxes, you may be wondering if it's worth the trouble to take a deduction for business use of your home.
First, let's dispel a myth: It's perfectly acceptable to take this home office deduction. It does not necessarily mean you will be targeted for audit. After all, as FreeFromBroke says, these deductions are "part of the Internal Revenue Service code and not taking them is letting the government have more of your money that it deserves."
BUT, if you are going to take a home office deduction, do it right.
1. Only take the deduction for space that is BOTH (1) Regularly and (2) Exclusively used for business purposes. No other use. EVER.
2. Understand how the deduction method works. Unless all the rooms in your home are about the same size, you will use a percentage method. Read about how to calculate the percentage of your home space used for business.
3. Be prepared to document all home expenses related to this deduction, including mortgage interest, real estate (property) taxes, homeowners insurance, utilities
4. Take specific maintenance, repair, and upgrade expenses that directly relate to your home office. You can't deduct the cost of a new patio on the other side of the house, but you can deduct the appropriate percentage of new siding or a new roof for the entire house or new carpeting for the office space.
Now's the time to get busy and figure this deduction.Then talk to your tax preparer to make sure you haven't missed anything and that you can appropriately substantiate all the expenses.
Read more about Taxes and Your Home Based Business
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