Tax Deduction For Working At Home

If you work from home either as an employee or self-employed, you can qualify for a home office tax deduction.

Here are some of the guidelines.

Exclusive work place

You must use part of your home regularly and exclusively as:

* A principal place of business
* A place where you meet your patients, clients or customers regularly
* A place that is a separate structure from your home that is used for business

Use as storage, rental, etc.

If using the property for storage, rental or daycare services, you should use the property regularly, but not exclusively.

Other guidelines

The amount you deduct is measured by how much of your home you use for business. Your deductions will be limited if your gross income from your business is less than the total business expenses.

In the case of daycare services and storage of inventory and product samples, do check if the special rules for those covers your situation.

For the self-employed, use Form 8829 for your home office deduction, and then report it on line 30 of your Form 1040 Schedule C (Profit or Loss from Business).

If you are an employee, you must establish that the regular and exclusive use of your home for business is convenient to your employer.

LINKS

Publication 587: http://www.irs.gov/pub/irs-pdf/p587.pdf

Form 8829: http://www.irs.gov/pub/irs-pdf/f8829.pdf

Form 8829 Instructions: http://www.irs.gov/pub/irs-pdf/i8829.pdf

Schedule C, Profit or Loss from Business: http://www.irs.gov/pub/irs-pdf/f1040sc.pdf