Home Office IRS Deduction (mortgage, insurance, deductions, income)

[LittleDolphin]

Is there any downside to declaring a home office and taking the IRS deductions on your Federal and state income tax forms?

Advice anyone??

[Omaha Rocks]

The only downside I can see is the paperwork involved.

If it's a legitimate deduction, why not use it?

[annerk]

If you truly qualify for the exemption, take it. But keep in mind that it is one of the most common audit flags, and if you don't qualify and are audited, they aren't going to give you a break.

I took it for last years taxes, because I was truly working from my home for my employer--I had no other office to go to, and the closest location for the company was several states away.

[golfgod]

I know it's supposed to be an audit flag but I've had a couple of CPAs tell me that it's not like it used to be-too many people legitimately work from home. For the record I've taken it at least 15 of the last 20 years, and also had rental houses (another pretty good audit trigger) and I haven't been audited since '79.

Just make sure that you comply with the rules, which used to be "an area used exclusively for business". That means it's not an auxiliary playroom in the evening.

golfgod

[LittleDolphin]

Thanks, both my spouse and I each have dedicated home offices, used for nothing else but our work. We've never taken the deduction as my spouse thought it was not a good idea for some reason...I think we should since we qualify for the deduction.

Our offices equal one-quarter of the total square footage of our home. You can also deduct the proportion of utilities and property taxes, too? Anything else?

[StoneOne]

Definitely take it.

You can deduct the portion of the house/apartment that's used for business from rent/mortgage, insurance, utilities, and taxes.