Stacy’s Tax Tips
I am constantly asked about the home office deduction, so I wanted to spend a bit of time to clarify the law on this.
It must be the principal place of business.
Must be used by patients, clients or customers in dealing with the taxpayer in the normal course of business.
If you are an employee, then the business use of your home must be for the convenience of your employer.
The IRS can disallow this deduction if it is not a separately identifiable area used only for business. Don’t try to say that the kitchen table where you eat is exclusively for business.
Keep in mind that the home office deduction cannot exceed the gross income for the activity.
The IRS does not allow a deduction for the first line at your home office (it deems that as personal).
This is an area that the IRS looks at to ensure that you meet the requirements before taking it.
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