Jan 162014
 
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Clients often ask me, “Will taking the home office deduction trigger an audit of my tax return?”

The answer is No.  In the past, the home office deduction was subject to very strict rules by the IRS. However, in 1999 they loosened those rules, allowing more people to be eligible to claim the home office deduction.

There is absolutely no reason why you shouldn’t take the home office deduction if you are indeed conducting business activities out of a bona fide home office.  However, because the home office deduction is easy for people to abuse, one must be disciplined in how he/she uses a home office, and follow the rules closely.  That way, in the event of an audit (not because of taking the home office deduction, but for other reasons), the home office and the related home office deduction will stand up to IRS scrutiny.

For recent statistics regarding the home office deduction visit Small Business Trends.

For more details, see IRS Publication 587, Business Use of Your Home or contact me via R. Darren Sanford, CPA, CGMA.

Beginning with tax year 2013, there is a new simplified home office deduction method…even more reason for you to start your very own home based business.

Disclosure of Material Connection: Some of the links on this blog are “affiliate links.” This means if you click on the link and purchase the item, I might receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

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