When is an Office a Home Office?

When is an Office a Home Office?

by Nancy F. Blumberg, CPA, CFP
Simon Master & Sidlow, P.A.

Corporate downsizing has caused more people to choose to work at home.Many people find working at home attractive: overhead costs are kept to a minimum with the absence of the cost of renting office space and commuting.Working at home permits a more flexible work schedule.It may offer more independence and more family time.Add the benefit of deducting home office expenses and many people are enticed to start working out of their home.

Qualifying for the home office deduction is not simple.The deduction is often looked at closely by the IRS so it’s important to be certain one meets the guidelines, which include:

  • The home office must be used exclusively for business; the home office area must be a distinct area of your home; it must be used regularly.
  • The essence of one’s business must be conducted in this office (goods delivered or services rendered in this place.)
  • The amount of time spent at this location should illustrate that this is the principal place of business.

Other ways to qualify for the home office deduction include using the home to provide day care services or to store inventory.To qualify for these as tax deductions, the space must be used regularly but does not need to be used exclusively for business purposes. More…