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  • IRS question

    For all of you Americans who work from home. Suppose I use a bedroom in a two bedroom exclusively for retouching income. How does the IRS see that as a deduction, if they do at all? Do they calculate some sort of cost of office rental according to the size of the room relative to the whole apartment?

    I haven't done this yet, but, I may move in to a bigger place.

  • #2
    Re: IRS question

    They do see that as a business expense along with a portion of the utilities etc. However the rules for all of this change from year to year (it seems) and I think the best thing for you to do is to hire an accountant to do your taxes for you. They get paid to keep up with all the changes and they get to explain why they did what they did when the IRS starts asking questions.

    You are an expert at what you do and people hire you for that skill. Doing taxes correctly takes as much skill as what you do. Hire an expert in that field to work for you!


    • #3
      Re: IRS question

      In my case it has to do with how much of the house is actually considered your work area. If it's a fifth of the house I believe you get an equal write off, though I can't recall if it has to do with your rent/house payments or utilities.


      • #4
        Re: IRS question

        Not sure about American rules, but my accountant had me calculate the square footage of the hallways and stairs from the front door down to my office and from the front door to the dining room table and add that to the square footage of my office to give me the percentage of my home used for business. You see sometimes clients come to my house and sometimes we do business at the dining room table, and sometimes in my office, so its all part of the 'working space'.
        Maybe you can do the same.
        --Shift Studio.


        • #5
          Re: IRS question

          Yes that's right. You figure out the proportion of square footage of business to the entire home. If it's a fifth of the square footage of a 1000/month place, then 200 a month gets written off. It's best to go around the place with a tape measure at some point, because otherwise you'll find yourself doing too much estimating and the end and you might overlook some spaces that you have designated for business. You can also write off household things that are necessary to work in those spaces: lightbulbs, office supplies, etc.

          I wrote off all my share of the utilities (full cost divided by three because I have two roommates.) Same thing with cell phone, if you're using your phone 50 percent of the time for business, then you can write off 50 percent of the monthly bill.


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