If you work from home as your principal place of business you may be eligible for the Home Office deduction. In order to qualify, the IRS will want to know if there is a specific area within your home designated as your work space. You will need to demonstrate you work from this space regularly and exclusively and that your home is your principal place of business.
Tax lawyers suggest the best work space for claiming the deduction would either be a separate room, or a separate group of rooms. But, these same tax attorneys are also quick to point out that the IRS merely requires the area to be separately identifiable, and as such a work space could be just part of a larger room and still pass IRS scrutiny.
If you do opt to use a part of a room for your work space, anything you can do to segregate the area from the rest of the room is likely to be helpful. Tax lawyers counsel would-be home office deduction claimants that things like furniture positioning, or whether they use blinds and/or partitions to help separate the space, will all be factors in how successful they are in making the work space qualify for the deduction.
Assuming the work space qualifies, you must still demonstrate you actually work in the space regularly and exclusively. IRS attorneys interpreting the “regular” requirement point out there is no specific number of hours or days before the regular threshold is met. These tax attorneys say it is expected, however that the claimant can establish they work from the specific work space a substantial amount of time and that it is an integral part of the business operation.
The exclusive requirement, which also must be met to qualify for the deduction, merely requires the space not be used for any other purpose other than work. Tax lawyers warn that any personal use of the space will frustrate your efforts to successfully claim the deduction.
IRS attorneys suggest home office deductions are one of the flags which often trigger an IRS audit. So if you make a mistake and incorrectly claim a deduction which is disallowed following an audit, you could end-up owing back taxes and be subject to interest and penalties. If you have questions about whether your office qualifies for a home office deduction, consult a competent tax lawyer or other tax professional to get answers you need to avoid making costly mistakes.
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