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The Strange Lie You’ve Likely Heard Regarding the Home Office Deduction

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Jake Randall

CEO & Founder at Taxbot
Managed product creation and marketing BS Finance, University of Utah – Experience in late stage mergers and acquisitions.
Jake Randall

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You have been lied to…

For the last 50 years we have all been told something that is just plain wrong. Some accountants regurgitate this myth because someone once told it to them…Here is the myth:

Claiming a home office deduction on your tax return increases your chance of an audit. 

Most of us have a healthy fear of the IRS because we have heard horror stories of people being audited.

But this lie has morphed into an urban legend that’s causing millions of people to avoid taking a legitimate deduction that could save them thousands. In fact, it could easily put an extra $15,000 in your pocket every 5 years.  We will talk more about the savings in a minute.

But first…

To dispel this myth, a large accounting firm did an internal study and found no statistical evidence that clients claiming a home office had a higher audit rate than those not claiming the deduction. The difference was zero… nada… nil.

As a matter of fact, in 1999 and again in 2013, Congress passed legislation making it easier to claim a home office deduction.  If congress is making something easier to take advantage of…do you think they want people to use the deduction? Absolutely they do!

We ran the numbers for a couple with a modest $200,000 home and estimated that claiming a home office deduction would save them $2,419 in cash each year.

Over 5 years that is $12,095 in savings.  If they invest that savings at a modest 6% for 5 years, they would have $14,454. What could you do with a cool $15,000?

The point is, don’t let your accountant talk you out of claiming a home office because it might trigger an audit. Why pay more in taxes if you can claim a deduction you are legally entitled to?

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PS. You might be interested in our free guide, “Ultimate 5 Minute Guide to Claiming a Home Office Deduction”.  There are some very important requirements for claiming a home office deduction and we will make it very easy for you to understand what you need to do to qualify your office.

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Jake Randall

Managed product creation and marketing BS Finance, University of Utah – Experience in late stage mergers and acquisitions.

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