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Our last post dealt with why you should absolutely claim a home office deduction if eligible. Today we discuss eligibility.
To be eligible, you need to use a portion of your home, exclusively as a principal place of business. Regular usage means at least 45 minutes a day, 4-5 times a week. Exclusive means that you have a separate, identifiable spot for your business that has no personal use.*
Under the new law, you either have to use your home for your most important functions for your business OR meet the following two requirements:
1. You do your management and administrative work out of your home for a business AND/OR
2. If you have other offices they may NOT be used for administrative duties.
For example, Dr. Jones has an office where he practices medicine. He also has a home office where he does his billing, and other administrative duties. He CANNOT write off his home office, if he also does his billing at his practice office. He must keep them separate.
So, what does this mean for you? You can have more than one office! Just be sure that you do your administrative work from your dedicated home office “regularly,” and be sure to document your time there and what you’re doing. Use time sheets and log them into Taxbot!
Taxbot is perfect for bullet-proofing your home office in that you can log in your activities and show that you are doing your administrative work at home.
*For more details on this, either get my book, “Lower Your Taxes:Big Time” or get my home study course “Tax Strategies for Business Professionals.”