Ever since COVID-19 began, businesses have become more accustomed to working from home, even to the point of running their businesses from home. You see people turning all sorts of businesses into an operation that is being run in a basement, garage, or even just a spare room. What some might not know is that by using a part of your home for your business, the possibility of deducting expenses on your taxes have opened as home office deduction is available to those who hit two simple requirements:
· Regular use
· Principal place of business
There is a simplified computed option to help the taxpayer determine the amount that would be considered. This option is calculated by the amount of square footage used for the office to help calculate the actual expenses. Some of these mentioned expenses that could be deductible would include things such as: insurance, utilities, repairs, and mortgage interest.
Let’s dive into these two requirements. The first requirement is that you must take the deduction of the specific room you use for your business, wherever that spare space might be. This part of the home is set aside for completing whatever the line of work consists of. The second requirement is you have meetings with clients, customers, or others in your home with business material you would be able to deduct, even if your business is being run at another location.
By: Chandler Hobbs, Tax Intern at CROFT & FROST