Blog Post

It’s a fantasy many of us have at tax time: we hear about the mystical form 8829: ‘Expenses for Business Use of Your Home’, and we start to dream. We say to ourselves “I have that little desk in the kitchen where I work on reports”, or “I make phone calls in the evening from the breakfast nook”. But instead of grabbing your pencil, take a deep breath, and read on…

‘Business Use of Your Home’ is a very real, and allowable, deduction on your taxes IF you meet certain stringent requirements. It is also a somewhat famous ‘red flag’ for an Audit, but if you do your homework (get it? home-work), you can, and should, take the deduction. It’s all about Qualifying. Just like qualifying for a sports activity, it takes patience, careful work and diligence to see if you qualify. (And careful work to keep all the materials you’ll need to support your claims…)

You can do it –
Only if you qualify.

And you can claim –
Only the expenses you are entitled to.

You will need to –
Document everything.

Only if you Qualify: here’s some examples of the big hurdles –

  • You must use that part of your home ‘Regularly and Exclusively’ for business purposes. (So, that means no room where you can have any fun or entertain: if you have a sofa-sleeper, kid’s toys, sauna, big-screen TV and DVD player, etc., in your ‘office’, it’s probably not going to fly.)  It also means that any activity in that area of the house must be used ONLY for business, not for personal use, and not just occasionally, but all the time.
  • If the Office is inside your home, it must be your principal place of business, or the place where you meet with clients or customers.
  • If you are a telecommunter? You have to meet the above criteria, plus work at home at your employer’s convenience. (Not because you like working in your jammies…)

Only the expenses you are entitled to:  for this info, you need to become very familiar with your house…

  • Get out your measuring tape. Many of the expenses are based on the percentage of the house which is used for business. Therefore, you have to measure the space you are claiming, and know how much square footage your house is. (Never thought taxes would require a measuring tape, did you?!)

Buckle your seatbelts if you are going to embark on this quest! On top of the difficulties of knowing whether you qualify, you also might have to deal with things like: the depreciation of your home, which expenses are allowable and which not, the carryover of expenses, what happens when you sell your home, and a whole host of other details!

So in this instance, it truly is worth looking into a qualified Tax Professional for help with this filing. For more info contact Litchfield County tax attorney Martha Miller at 860-435-4666, or click on the menu above to explore our website.