Working From Home/April 15

[Rinkydink]

Since May of '08 my SO is based from our humble abode. Is it worth the hassle to claim home office etc etc on 2008 taxes? Any tips or pitfalls, legal of course?

[BFish]

it's not any easy deduction to get even if you qualify. after completing form 8829 Form Link and assuming your spouse is an employee, the allowable deductions are reported on schedule A as a misc. itemized deduction subject to the 2% AGI (adjusted gross income, bottom of page 1 of 1040) limitations. in effect certain itemized deductions (i.e. mortgage interest and real estate taxes) are allocated on form 8829 to misc itemized and reduce the normal deduction on schedule A for the home office portion. where you may benefit is by allocating all other "home office" related expense that aren't normally deductible (i.e. utilities, maint, etc) which may assist in exceeding 2% of AGI.

 

from experience i find it to be a concept that excites taxpayers, but in the end it usually doesn't work. read the instructions to the form and work up some numbers. there are some specific rules that must be met on certain deductions as well.

 

all the above assumes she's an employee and meets the home office requirements as such. if she's an independent contractor it's a different game and the deductions are usually more beneficial.

[BULLman]

I depends. Accountants please chime in if I am full of bs, I was going to claim a home office. It is where I do a lot of my work other than in my car or in front of my customers, I didn't have a desk at the main-office and I don't have a spare bed in it. An accountant said that it might not be worth because if you sell your house you would have to give back that portion of the office - or, something like that. It really didn't make a whole lot of difference either way on my refund.

[BULLman]

All I heard was blah=blah-blah than my ears perked up when you said

if she's an independent contractor it's a different game and the deductions are usually more beneficial.

 

I am an independent contractor for the printing company I just started with. Could you maybe send me a pm or something? See my post above.

[Joe Frickin' Friday]

I was told by a pro tax adviser that a home-office deduction is worthwhile if you are renting, but not if you own. The issue (if you own) is that your house is expected to appreciate in value over time (I know, hard to imagine these days). So you claim a home office deduction now, including an allowance for depreciation; and then 5/10/15 years from now, when you sell the house at a profit, you have to pay taxes on the gain, since you've been reducing your taxes all these years by expecting a depreciation.

 

The same adviser said it works well if you're renting, since there's no issue with actual property appreciation/depreciation; your rent payments reflect your actual costs, so you take your deductions, and nothing comes back to bite you years later when you move out.

[BFish]

if you're renting, are an employee and can't itemize you will get zero home office deduction. this is based on the assumption that you can't itemize, which is required to take the deduction. different if filing a schedule C as a self-employed individual.

 

my post must not have been clear. i will state once again, that home office is rarely allowed due to the mechanics, not due to the allowability.

 

i don't necessarly agree on the owning issue of cap gains down the road. it would be miniscule compared to a current deduction at ordinary tax rates.

 

also, i'm curious as to what a pro tax advisor is.

 

i'd be happy to discuss this with anyone. just give me a call.

[tallman]

Are you saying I'm going to have problems because I rent my home office from my other company that also has an office in my home that also rents that office from another company located in the same premises?

I also have another company that specializes in same day delivery, and the other 3 companies are its only customer.

I get all my meals delivered.

They take my clothes to the company that does laundry, and then deliver them back the same day.

So far I'm OK with riding my motorcycle to work, but I'm having trouble getting both vehicles as a deduction since I only drive my car less than 50% of the time.

At this rate I'm going to have to rent somewhere to live as my home businesses are thriving.

I'm thinking of starting another one that lease utilities and supplies them at an inflated sost to home businesses.

 

 

 

[BFish]

Are you saying I'm going to have problems because I rent my home office from my other company that also has an office in my home that also rents that office from another company located in the same premises?

I also have another company that specializes in same day delivery, and the other 3 companies are its only customer.

I get all my meals delivered.

They take my clothes to the company that does laundry, and then deliver them back the same day.

So far I'm OK with riding my motorcycle to work, but I'm having trouble getting both vehicles as a deduction since I only drive my car less than 50% of the time.

At this rate I'm going to have to rent somewhere to live as my home businesses are thriving.

I'm thinking of starting another one that lease utilities and supplies them at an inflated sost to home businesses.

 

 

 

sounds like you already qualify for a bailout and have first hand experience in my world....ain't it fun.

[tallman]

It may be too late.

[Lets_Play_Two]

also, i'm curious as to what a pro tax advisor is.

 

 

I would assume it is like the Olympics used to be. You're a Pro if you get paid for advice. So always be sure to send a bill!!!

 

I stopped telling people I was a CPA so they would quit asking for amateur advise.

[Joe Frickin' Friday]

if you're renting, are an employee and can't itemize you will get zero home office deduction. this is based on the assumption that you can't itemize, which is required to take the deduction. different if filing a schedule C as a self-employed individual.

 

OK, I see the distinction now: employee vs. self-employed.

 

also, i'm curious as to what a pro tax advisor is.

 

The advice was given by someone at H&R Block. I don't know that "tax advisor" was their official title, and I don't know that their advice was absolutely correct; I only mentioned it to give a little more credibility than saying that the advice came from a totally unvetted source.

[BFish]

The advice was given by someone at H&R Block. I don't know that "tax advisor" was their official title, and I don't know that their advice was absolutely correct; I only mentioned it to give a little more credibility than saying that the advice came from a totally unvetted source.

 

 

'nuff said...everyone have a great turkey day.

[Art..]

It's not worth it.

 

 

[David]

I work from home (have for a couple decades) but have never taken the deduction. I do make the business pay for its share of utilities.

[Gregori]

The advice was given by someone at H&R Block ... a totally unvetted source.

FIxed it for ya.

[BFish]

The advice was given by someone at H&R Block ... a totally unvetted source.

FIxed it for ya.

 

[Joe Frickin' Friday]

The advice was given by someone at H&R Block ... a totally unvetted source.

FIxed it for ya.

 

 

I gather the folks at H&RB aren't widely respected in the tax/accounting profession?

 

I don't go to them (or anyone, really) for advice on a regular basis, so I can't say from experience whether they're any good or bad. I just use their TaxCut software to do my own taxes; this spring I went to them on one occasion to help me figure out how to best deal with the sale of a house and a condo (while owning another house) in 2007; the home office thing came up somehow and she suggested I avoid it.

 

As others have suggested, I do deduct everything else possible: internet, cell phone, mileage, and so on.

[Lets_Play_Two]

I work from home (have for a couple decades) but have never taken the deduction. I do make the business pay for its share of utilities.

 

So you are deducting the utilities.

[BFish]

The advice was given by someone at H&R Block ... a totally unvetted source.

FIxed it for ya.

 

 

I gather the folks at H&RB aren't widely respected in the tax/accounting profession?

 

I don't go to them (or anyone, really) for advice on a regular basis, so I can't say from experience whether they're any good or bad. I just use their TaxCut software to do my own taxes; this spring I went to them on one occasion to help me figure out how to best deal with the sale of a house and a condo (while owning another house in 2007; the home office thing came up somehow and she suggested I avoid it.

 

As others have suggested, I do deduct everything else possible: internet, cell phone, mileage, and so on.

 

 

 

let's put it this way....no one would come to me to have their final drive swapped out. i may have the books, pics, videos and slept at a holiday inn express last night, but it may have problems down the road. no offense meant to you Mr. Friday by my nuff said comment.

[David]

I work from home (have for a couple decades) but have never taken the deduction. I do make the business pay for its share of utilities.

 

So you are deducting the utilities.

 

Well, I guess technically. But I thought we were making a distinction between direct expenses vs. depreciable expenses. The latter are expenses I don't think are worth messing with. There's no downside (or danger of being audited, I believe) in deducting the business portion of monthly utility expenses.

 

We can ask Brian, though he's probably out trolling for final drives to replace.

[BFish]

I work from home (have for a couple decades) but have never taken the deduction. I do make the business pay for its share of utilities.

 

So you are deducting the utilities.

 

Well, I guess technically. But I thought we were making a distinction between direct expenses vs. depreciable expenses. The latter are expenses I don't think are worth messing with. There's no downside (or danger of being audited, I believe) in deducting the business portion of monthly utility expenses.

 

We can ask Brian, though he's probably out trolling for final drives to replace.

 

have not had a problem with uncle sam in taking directly related expenses to a home type office. i do recco taking any mortgage interest and real estate taxes. while itemized deducts will be reduced a schedule C taxpayer is saving income tax and SE tax. be careful on the house phone/internet...supposed to be dedicated to the business use. also, the Schedule C taxpayer vs an employee get's more bang for the buck, usually.

 

in reality a blind man (i mean person) with honda specific tools would be better suited to perform final drive repair than me!

[Lets_Play_Two]

"There's no downside (or danger of being audited, I believe) in deducting the business portion of monthly utility expenses."

 

Are you sure? Doesn't this require some sort of allocation based on space used? Separate phone lines are easily identified, but how does one allocate heat, a/c, lights? Seems to this amateur tax adviser that this requires same "proof" that the depreciation deduction does!!

 

I may drive to Melbourne to have my final drive checked out!

[Dave McReynolds]

I thought you had a corporation, David. The rules are somewhat different, depending on whether your business is a corporation, an S corporation, a partnership, or a sole proprietorship.

[David]

The phone lines are separate, so that's easy. Utilities are allocated based on square footage, as is cleaning, internet, security, etc.

 

If they want to audit me on that stuff, screw 'em. I pay so much in taxes and avoid all the usual red flags that they'd be wasting my time.

[David]

Yes, an S corp.

[BFish]

been waiting for you Dave.....this 3 hour time diff has been killin me!

[BFish]

Yes, an S corp.

 

so you merely "reimburse" yourself for the out of pocket expense directly related to your office from the S corp.?

 

 

 

say yes.

[David]

yes

[BFish]

yes

 

thought so...

 

in florida that could be construed as "rent" by the state and sales tax would be due. commercial rentals are taxable as sales/use tax down here. just a tidbit of useless info for the masses.

[Dave McReynolds]

The important distinction with an S corp is that you can't just deduct your unreimbursed business expenses against the S corp income, the way you could if you were a partnership or a sole proprietorship. You need to submit expense vouchers to the S corp and get reimbursed, with the expenses then deducted on the S corp books.

[BFish]

..and david assured us that he does just that.

[Lets_Play_Two]

Brian....how much play is allowed when I wiggle the rear wheel on my GT?

[BFish]

Brian....how much play is allowed when I wiggle the rear wheel on my GT?

 

very gray area..i'd rather not comment

[bakerzdosen]

I'm still shocked that I've found this thread interesting (to this point at least).

[BULLman]

I'm still shocked that I've found this thread interesting (to this point at least).

I;m out

[Rinkydink]

Sooo... since her company pays for my phone/unlimited long distance, super fast DSL and her commute costs us nothing, I guess I'll just leave well enough alone then.

[stubble!]

I'm still shocked that I've found this thread interesting (to this point at least).

 

Yep, it's funny the stuff that starts holding your attention once you have a kid (or two)

 

[bakerzdosen]

I'm still shocked that I've found this thread interesting (to this point at least).

 

Yep, it's funny the stuff that starts holding your attention once you have a kid (or two)

Not to mention the hours of the day that you end up keeping...

[BFish]

Sooo... since her company pays for my phone/unlimited long distance, super fast DSL and her commute costs us nothing, I guess I'll just leave well enough alone then.

 

yep...you're ahead of the game with that deal.... thread still going at 630am est. turkey in the oven, chilly 42*, off for a couple hour ride.

 

enjoy your day everyone.