of us who have a home office, ask ourselves every year," Should I
take the home office deduction?" Many accountants will tell you that
by taking the home office deduction, you will be at a high risk for an
audit. Thus , it is important to understand the IRS point of view and some
of the precautions before taking the home office deduction.
According to the IRS, those
of us who can take a home office deduction are those who spend most of
our working hours in the home office and conduct most of our important
business there, such as meeting with customers on a regular basis.
As of now, those of us who
cannot take the home office deduction are those who spend most of our hours
performing services in another place and who only use the home office for
routine tasks such as record keeping.
Although the home office
deduction carries some precautions, that should not be a deterrent. When
taking the deduction keep the following in mind:
Those of us that take the home
office deduction are familiar with form 8829. This form is the weapon the
IRS uses to get a grip on taxpayers taking the home office deduction. This
form is submitted with schedule C .Although the IRS denies it, Form 8829
represents a red flag that singles out your tax return for scrutiny.
Maintain a separate telephone
number for business purposes only.
Encourage customers to visit
your home office on a regular basis.
Keep a separate log of all customer
visits and the amount of time you spend in your home office.
Address business correspondence
to your home office.
As you can see, a home office
deduction is a complicated issue and should be discussed with your accountant,
attorney or other professional.This article was written with the assistance
of the book What The IRS Doesn't Want You To Know by Martin Kaplan.