Working from Home
Did you know that you may be eligible to take a home office deduction, even if you are an employee and even if you are renter?
If you are a business owner, do you regularly use part of your home exclusively for conducting business? Then you have a home office.
If you are an employee and use part of your home regularly and exclusively for business and for the convenience of your employer, then you have a home office.
So great you say, I have a home office. What expenses and how much can I deduct?
There are two methods to determine the home office deduction. Both begin with the square footage of the home office.
Using this method you can take $5 per square foot (up to a maximum 300 square feet). This is easy because you don't have to find utility, cable or other bills for the year.
Simple, but generally results in a lower deduction.
With this method, you also need the total square footage of your home. You then take the square footage of the home office divided by the total square footage. That percentage is then multiplied by the total cost of the following expenses:
Mortgage Interest (or Rent)
Gas, Electric, Water and other utility costs
Depreciation (write part of the cost of the purchase price of your house)