Business calls made on a second line in the home and/or from a cellular telephone used exclusively for business would generally be fully deductible. Deductible telephone expenses are not part of the office-in-home expenses. Instead, they are deducted as part your other ordinary and necessary business expenses.

Home owners insurance can be tricky. If your home insurance provides coverage beyond the end of the tax year, the IRS position is that the you may currently deduct only that portion of the premium that provides coverage on the business portion of the home until the end of the year. The remaining portion would be claimed in the next year

The next topic should be the depreciation of your home. To do so there are some things you need to determine. You will need to determine the percent of business use of your home, the month and year that you first satisfied the tests for deductions and the adjusted basis and fair market value of your home at the time you first qualified for the deduction.

The basis for depreciation is the lesser of:

1. Your basis (i.e., cost plus capital improvements minus any casualty losses) in the home on the date that the individual became eligible for the deduction; or

2. The fair market value of the home on that date. Unrelated expenses are those that benefit only the portions your home that are not used for business reasons.

Unrelated expenses include such costs as lawn and garden care, and repairs to the non-business areas your home. Unrelated expenses are not deductible as part of your office-in-home expenses.

So now you have general information on what to deduct for your office in home. This article is not intended to be a complete review of office in home deductions, and you should research further as needed. For instance, if you are a child care business, you have some other rules to follow.

Please use this information with other resources available to make a good sound determination of what you should be deducting in your situation.

Page 2 of 2 :: First | Last :: Prev | 1 2 | Next