Don’t Hesitate to Take Home Office Tax Deductions

January 26, 2011

By Jennifer V. Hughes
As April 15 approaches, those who work from home have special considerations when it comes to tax time. Sandy Lefstein-Suchoff, a CPA based in Fair Lawn, has the following tips and suggestions:

• If you have a separate and distinct space in your home that is used regularly and exclusively for work, you can deduct a percentage of your rent or mortgage interest, your utilities, home insurance, and real estate taxes. So, if you work from your kitchen table, that would likely not qualify, but if you have a partitioned basement area—that probably would.

• If you use a portion of your home for storage of work-related materials, that also can qualify you for deductions.

• Most people know they can deduct items they use for work—from paper and supplies to computers and office furniture. Deductions are taken in a different way, however, depending on the item. Deductions for machinery and equipment like a computer or printer that depreciates over time is taken in one way, while other items like paper and pens are taken in another. Check with your accountant to make sure you have the right forms. And, of course, keep all of your receipts and paperwork.

• One common misconception about tax filings for people who work from home is that it is an “automatic red flag,” when it comes to possible audits. Suchoff said that’s untrue: “If you truly use your home as a business, it should not be a problem.”

• Some home improvements might even qualify for tax deductions. If you frequently have clients or customers come to your home and you purchase, say, new siding to improve the appearance, that can be seen as a capital improvement.

• Suchoff said she sees far more work-from-home clients than in previous years. She noted that even the Internal Revenue Service allows its employees to work from home three or four days a week.

— Jennifer V. Hughes

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