29/07/2024
Claim Home Office deduction, if you’re self-employed, own a small business, or work from home in any capacity other than as an employee !
👉Is your home your principal place of business or used as an ordinary place for meeting clients or for administration of the business ?
👉Is the use of home office is exclusive and regular for business activities ?
Then the expense relating portion of the dwelling used for office can be claimed as business deduction as per any of these 2 methods.
1) Simplified Method:
👉Allowable square footage used for exclusive business purposes i.e. designated business area * $5 (Max deductible for 300 sq ft hence, limiting it to $1,500)
👉Deduction cannot exceed Income after non-office business expenses.
👉No depreciation is allowed on portion of home used for home office, hence no depreciation recapture.
2) Regular Method:
👉Based on Percentage home used for business
👉Actual expenses determined and records required to be maintained
👉Deduction Amount in excess of gross income limitation may be carried over
👉Depreciation deductions are applicable for portion of the home usde for business
Hence, while choosing which home office deduction method is right for you,
check if home office is less than 300 sq ft, actual home office related expenses are below $1,500, and simple calculation preferred without detailed record-keeping, then Simplified method is preferable. Else, with detailed documentation, Percentage method can be used.
To avail benefits of many such deductions on your taxes, we can help you find and strategizing it.
Jay Bavadiya
Hitesh Kriplani
