Phoenix Taxes | Home Office
If you use part of your home exclusively for business, you may be entitled to a tax deduction for the expenses related to business use of your home. If you qualify, you can claim the deduction for expenses regardless of if you rent your house or own. There is also the simplified method of calculating the deduction or the regular method, either of which is acceptable.
The first rule is that you must use a part of your home regularly and exclusively for business purposes. The part of your home used for business must also be your
- Principle place of business, or
- A place where you meet clients or customers in the normal course of business, or
- A separate structure not attached to your home, such as a garage or studio
You can choose to use the simplified method option to calculate your deduction. You would multiply the allowable square footage of your home office by a rate of $5. The maximum square footage allowed for this method is 300 square feet. This option will save you time because it simplifies how you figure the deduction since you don’t need to keep receipts or certain other records.
If you choose to use the regular method to figure the deduction, you will include certain costs associated with your home. If you own your home, part of your mortgage interest, taxes, utilities and repairs and maintenance can be included. Renters can include a portion of their rent they paid in addition to the utilities, repairs and maintenance.
If your gross income from the business is less than your expenses, the deduction for some expenses may be limited.
If you are an employee, you must meet additional rules to claim the deduction. For example, your business use must also be for the convenience of your employer.
If you have questions, feel free to contact us at Dusseau & Makris, PC, your Phoenix CPA firm.