Save Taxes With a Qualified Home Office

June 7, 2008 · Filed Under WFH · 2 Comments

When you work from home it makes sense to have a space in your home dedicated to work. It makes even more sense when you realize how much you can save on your taxes by having a qualified home office.

I have heard many people, even other professional tax preparers say that the IRS requirements for a home office are too strict, that calculating the taxes is too complicated, (especially when you sell your home), and that claiming a home office is like waving a red flag in front of an auditor.

The truth is, the requirements are strict, but not difficult to follow. All tax forms are too complicated, and, if you claim your home office properly you don’t need to worry about being audited.

The tax savings can be substantial. Not only do you get to deduct a portion of your rent or mortgage interest, you also get a deduction for repairs and maintenance, utilities, and office furniture. A sole proprietor using just 10% of the home as a qualified home office can potentially have thousands of dollars worth of deductions saving hundreds in taxes each year. A home office also qualifies as a place of business and will make more of your auto miles business miles. As an example, $5,000 in home office expenses will save a sole proprietor at least $1,250 in taxes.

To be a qualified home office your office must be used regularly for your business. It must also be used exclusively for business. This is where most people trip up. You have to think of your home office the same as any business office. This means that any use that is not business use disqualifies the home office. So you can’t have guests sleep in your office, and the kids can’t use the computer to do homework. There are two exceptions to the exclusive rule. Space used as a daycare does not need to be exclusive, and the same is for true for the storage of inventory or product samples.

Home office deductions are not limited to the self-employed. If you work for someone else you may also be able to claim a home office deduction. The home office must be for the convenience of the employer, and your employer must not pay you rent for your home office.

For more information on home office visit the IRS website and refer to Tax Topic 509, Business Use of Home, or Publication 587, Business Use of Your Home (Including Use by Day-Care Providers).

And just as a side note, if your tax preparer ever tells you that a tax deduction is “too complicated” you need to find another tax preparer!

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Tags: home office, taxes, work from home

Top 30 Tips for Staying Productive While Working From Home

March 28, 2008 · Filed Under WFH, telecommuting · Comment

I found this older post from ZenHabits today. I find that while I love working from home, I do sometimes find it hard to stay productive. There are so many distractions, and no one looking over my shoulder making sure I am working!

While I was reading the post I was struck by how much of the advice related to working at home the way you would work in an office. Things such as setting a schedule, limiting the number of hours you work, and taking breaks are all things that happen naturally with most “away from home” jobs. I tend to either have trouble getting started and spend all day procrastinating, or I get so involved in my work I work 12 or 14 hours straight and forget to eat. Honestly, I’m not sure how productive I really am after 10 hours of working without eating!

While all 30 work from home tips were great the last tip was my favorite.

30. Be grateful you’re working from home and not in some cubicle! That gratitude will motivate you to work harder, so you can continue to work from home.

So click on over to ZenHabits to read the rest of the 30 work from home tips, and find even more great tips in the comments.

Would you like to share your best tips for staying productive while working from home? Comment with them here and I’ll put them all together in a WFH Pro post and give you credit!

Those of you who know the joys of working from home, whether you’re self-employed or freelancing or telecommuting, know also the joys of procrastination and the lures of laying on the couch. Now, I’m as much in favor of a good nap as the next guy, but a nap should be a break, not your default work mode….

Dead Body Discovered In The Home Office

January 29, 2008 · Filed Under WFH, telecommuting · 1 Comment

I made the trek up to the 3rd floor to my home office and found the above gruesome but not-too-uncommon discovery on the carpet by the door. A few feet away I found another pile of body parts, this time, internal organs:

And then there was the bulk of the remains a few feet further away. It appears I came just in time - the octopus could be saved but the goose was too far gone.