If you’re running your business from home, it’s important to understand how home office tax deductiions impact your taxes. Deductions related to a home office are frequently under-utilized, often due to confusion at to whether you qualify for them. Here are a few home office tax deductions you should know about:
1. The Expenses for Your Home or Apartment
In the past few years, there have been multiple pieces of legislation passed that impact how a restaurant should depreciate its equipment.
Business owners operating from their homes are able to deduct a portion of the expenses for their home or apartment. This includes items like:
- Your mortgage or rent payment
- Property taxes
- Property insurance
- Utilities
The amount that you can deduct depends on the size of your home office as compared to the size of your home.
Assume that your home office is 240 square feet and your entire home is 1,200 square feet, this means you’re able to deduct 20 percent (240/1200) of your eligible expenses.
Certain repairs or improvements that impact your entire home may also qualify as eligible expenses. Like your other home office expenses, you’ll deduct a portion of these costs.
If you’ve forgotten to save receipts and statements related to your home office deduction, there’s another way to use it. This method is known as the simplified home officer deduction.
Your deduction is equal to the number of square feet in your house multiplied by $5. The maximum deduction when using the simplified home office method is $1,500.
2. The Cost of Supplies or Repairs Specifically for Your Home Office
Supplies that you need for your home office, like office equipment, paper, and pens, are also deductible. You can deduct the entire cost for these items.
Or, if you complete a repair or improvement that only affects your home office, you may deduct the whole amount..
Have more questions about when to take home office tax deductions? Connect with Gurian CPA Firm today!