“….looking for a home and share the same space for a minute or two. And you love me till my heart stops. Love me till I’m dead.” -Talking Heads

Last week we discussed working from home as an employee now we’ll discuss the home office as a self-employed individual. Honestly, this post came about just so I could use that lyric! It’s kind of a favorite…..

If you own your own business and your home office is your principle place of business you can use those expenses to lower your income.

When you make purchases for your home office (computer, desk, pens) make sure you save the receipts! I recommend saving a physical copy as well as an electronic copy. The physical copy can be kept in a folder and separated by year. The electronic copy can be attached to the expense in your bookkeeping software.

I love this feature of QuickBooks Online. When you record an expense in QBO, you can upload an attachment. So if you ever need to prove your records, the documentation is right in the software as backup! You can also do this with other types of transactions and documents. I’m sure other bookkeeping software has this feature.

Whether your an owner or a renter, you can use the deduction in any type of home. It does not apply to hotels or other temporary lodging.

The location can be any freestanding structure. So studios, garages and barns can qualify as long as they meet the “exclusive and regular use” requirements. The space must be used exclusively for conducting business and it must be the principle place of conducting business.

Your CPA can help you determine if taking the home office deduction is the right choice for you.

There are many idiosyncrasies of the home office deduction and many ways to calculate it. As always…document, document, document! You don’t want to “….make it up as we go along”! Photo cred to Suzannah Farr

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