Question about home office deductions

[Blonde Italian Princess]

Thanks in advance for helping me figure this out:

 

I work full time in a regular office job, but this past year I also did part-time contract work out of my home, where I have a separate office.

 

I made 1/7th of my income this year this way. Not a lot, and not working fulltime.

 

Can I take a home office deduction for something that is so part-time?

[hegemony]

did you use the home office for anything OTHER than work?

[Blonde Italian Princess]

did you use the home office for anything OTHER than work?

 

 

I would say this past year I ued it half the time for work 9or trying to find contract work), half the time for reading CB, doing my taxes, and checking my email. :-) It is not used for recreation or any other purpose and nobody else uses it.

[hegemony]

did you use the home office for anything OTHER than work?

 

 

I would say this past year I ued it half the time for work 9or trying to find contract work), half the time for reading CB, doing my taxes, and checking my email. :-) It is not used for recreation or any other purpose and nobody else uses it.

not used for CB?

[Blonde Italian Princess]

did you use the home office for anything OTHER than work?

 

 

I would say this past year I ued it half the time for work 9or trying to find contract work), half the time for reading CB, doing my taxes, and checking my email. :-) It is not used for recreation or any other purpose and nobody else uses it.

not used for CB?

 

 

Like I said, I also use it for reading CB. :-)

[hegemony]

well whenever I've asked tax professional I've been told 1) it is a huge red flag for audits and 2) the space needs to be only used for the business purpose, 100%. but check with someone who knows current laws as I have not look at this for several years.

[Peekaboo]

It is a red flag if you try to deduct half your mortgage/rent, utilities, etc and you couldn't prove that you're not deducting for the purpose of defrauding. If you set the space up to be used for your contract work and finding contract work, you *could* be ok. (A lot of people read CB (or worse) during the workday in high rise Wall St offices, doesn't make the space any less a business environment).

 

It really doesn't matter what percentage of your income your business provides you, but the deduction does get smaller if you have a lot of other deductions or show a loss. It DOES matter, though, when it comes to reporting all of your business income.

 

If you don't have a tax advisor, call the IRS or the SBA and ask for some information/assistance. You may also want to get some direction there on structuring your business and defining it as it's own entity if that is something that would benefit you in the future.

Edited February 24, 2007 by Peekaboo

[shasta]

I work at home full time. I take a deduction for 1/10 of electric. My home office is 1/10 of my square footage.