Home Office Deductions
You are working in your home office and a client stops by for a business meeting -- with child in tow. So you reach for a coloring book and crayons to keep the child occupied during the meeting. Did you know the coloring book and crayons may be tax deductible?
If you qualify for a home office deduction, you'll be able to deduct certain costs associated with the upkeep of your home. Mortgage and property tax payments, insurance costs, certain utility bills and Internet service (if it's used in your business) can all be deducted. Keep in mind you'll only be able to deduct the amount of those costs that apply to your specific home office area.
Let's say your office area is 15 percent of the total square footage of your home. You would be allowed to deduct 15 percent of your utility bills and general maintenance of your household.
If you own a Web site, you're allowed to deduct the cost of Web hosting, site development and maintenance and owning your domain name.
If you bought a new computer for your business, special laws allow you to deduct the full amount on this year's taxes instead of having to depreciate it over a number of years.
There are many gray issues regarding home office tax deductions. Be leery of television commercials suggesting liberal interpretations of the tax code. When it comes to home office deductions, specific tests must be met. Your ability to take the deduction will be determined by your particular facts and circumstances.
At Alex A. Accetta, CPA and Associates, Inc. we can provide you with all the expertise needed make sure you are taking advantage of the tax laws that pertain to a home business.
