Planning on Setting Up a Home Office?

If you're self-employed as a sole proprietor, partner, or LLC member, you may be able to deduct the costs of maintaining an office at home.

Generally, in order to claim a business deduction for an office inside your home, you must use the space exclusively as your principal place of business, or as a place to meet with patients, clients or customers.

In fact, current tax law gives you several ways to qualify for a home office write-off. Assuming you're eligible, here's the payoff:

o You can deduct 100 percent of any expenses that are directly related to your home office, such as an additional phone line.

o You can deduct a percentage of indirect expenses that relate to your entire residence, such as mortgage nterest and property taxes.

There are special rules for qualified daycare providers and taxpayers storing business inventory or product samples.

The great thing about home office deductions is they go on Schedule C (if you are a sole proprietor or single-member LLC owner) or Schedule E (if you are a partner or member of a multi-member LLC). Write-offs that appear on these business schedules are double tax savers, because they reduce both your income and self-employment tax bills.

Of course, there are some restrictions on home offices. And if you are an employee, different rules apply. Contact our firm for the details, including the recordkeeping requirements.