Bathroom Office

Unlikely.  The cubicle may have come into its own via Office Space and other iconic movies, but few use their bathroom as an office.  An accountant claimed he did but failed to get the coveted home office deduction in Bulas v. Commissioner.  Actually, the bathroom wasn’t really his office, but he claimed it too since it was adjacent to the bedroom he used as an office.  Bulas worked for the IRS for seven years and then for his own accounting firm for decades, preparing approximately 180 to 220 tax returns per year.

The question was whether it was an exclusively business bathroom.  Bulas claimed the bedroom—plus the adjacent hallway and bathroom—was exclusively business.  Unfortunately, the Tax Court found that his children and other non-business guests occasionally used the bathroom too.  It wasn’t exclusively business.

As this case shows, the standards are rigorous.  In general, you can’t claim tax deductions for a home office, but there are exceptions in Section 280A(c) of the tax code.  If you use a portion of your home for business, you may be able to claim a home office deduction, but you generally must use part of your home exclusively and regularly:

As your principal place of business;

As a place to meet or deal with patients, clients or customers in the normal course of your business; or

If the business portion of your home is a separate structure not attached to your home, then “in connection with your trade or business” (a more watered-down standard).

Exclusively and often for company typically implies separate, but a part of the space can qualify if it is obviously partitioned and you also can show non-public actions are excluded by method of the organization portion. since the bathing room circumstance shows, exclusive implies exclusive. Suppose you run within a space in your own home for full-time business, operating there 10 several hours a day, 7 times a week. do not allow your children take advantage of the business office to undertake their groundwork or you can risk dropping your deduction.

Other deduction possibilities consist of particular storage space use, rental use, or daycare-facility utilization of your home. In these cases, you need to create utilization of the property or home often for business, however it does not call up for for getting exclusively for business.

Generally, your deduction is dependent concerning the percentage of your home employed for business. Plus, deductions for particular expenditures are limited if your gross earnings away from your company is much lower than your complete company expenses.

Employees Beware. in the event you are an employee, the standard and exclusive company use should be to the comfort of your employer. That typically implies the company should call up for yourself to run in your own home (get it in writing). in the event you are self-employed, use type 8829 to figure your work from home business office deduction and assertion people deductions on collection 30 of type 1040 program C.

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