Author Topic: 2 out of 5 days remote - tax deductible?  (Read 2733 times)

FerrumB5

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2 out of 5 days remote - tax deductible?
« on: November 23, 2015, 10:27:02 AM »
I work full time, and 2 days a week from home. Is there a tax law that allows for some deductions? If yes, do I have to itemize in this case? (of course, given that itemized is better than standard). Thanks!

seattlecyclone

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Re: 2 out of 5 days remote - tax deductible?
« Reply #1 on: November 23, 2015, 12:38:01 PM »
See this bit of Publication 587. If your working from home is "for the convenience of the employer," (i.e. the fact that you work from home enables your employer to keep the office closed that day, or lets another employee use your desk), you may be able to claim a home office itemized deduction as long as the other requirements are met (particularly that the area you work from home is not used for any other personal activities). If your work-from-home arrangement is solely for your own convenience (i.e. because you would rather not commute), no deduction is allowed.

FerrumB5

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Re: 2 out of 5 days remote - tax deductible?
« Reply #2 on: November 23, 2015, 12:40:52 PM »
Thanks!
It's the latter - for my own convenience. No deduction it is then (well, I didn't have much hopes anyways :))

seattlecyclone

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Re: 2 out of 5 days remote - tax deductible?
« Reply #3 on: November 23, 2015, 01:08:57 PM »
From what I've read, claiming the home office deduction is correlated with higher audit rates. You should absolutely claim it if you're qualified though. I don't think the IRS is going to do a surprise inspection to see if you have one piece of personal paper in that area. It wouldn't be worth their time. Maybe be prepared to send them a photo of the area and make sure it looks like an office?

Cpa Cat

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Re: 2 out of 5 days remote - tax deductible?
« Reply #4 on: November 23, 2015, 01:17:30 PM »
My wife works from home because her company does not even have an office.  My question is how the heck would they know if nothing but this job is done in the home office?  Does it basically improve the chances of an audit, and during the audit they go in your house and look at your office to see if there are any personal files in the office?

It would generally be too costly to send IRS agents to your house to see if you play World of Warcraft from your home office. Generally, people tend to be honest during interviews, though. So during an audit, they'd just ask you if you do anything non-business there. They might get tricky and say things like, "Is there another computer in the house?" "Do you ever let your kids use that office for homework?" "Other than your desk and computer, what else is in your office?"

Assuming you don't use the simplified method, they have been known to ask for house plans/records that show the square footage of your house and interior. They might determine if your % used for home office is reasonable in relation to the total usable square footage in your house, and then from there it's a matter of making you prove the related expenses.

The Simplified Method for determining your home office deduction maxes you at $5 x 300 sq ft. It's called a "Safe Harbor." Which translates to "auditing your home office is costly for the IRS, so here's a method that we don't have to audit."

It's not the home office that correlates with high audit rates - it's that people have traditionally abused the home office. 50% of my house is my office! That means every single house-related expense is deductible! Time to deduct 50% of my kitchen renovation!

When you push a home office deduction (or really, any deduction) outside what is considered the reasonable norm, it will present an audit risk.
« Last Edit: November 23, 2015, 01:19:11 PM by Cpa Cat »

snshijuptr

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Re: 2 out of 5 days remote - tax deductible?
« Reply #5 on: December 13, 2015, 07:42:51 PM »
I work from home and my Mom just retired as an accountant. She urged me NOT to claim the home office deduction because I don't really have a separate space. To get home office, you really need a separate room that is only used for business (e.g. a beautician with a home salon). I work on my couch from a work-provided computer so the risk is not worth the minor deduction.