Home Business - Home Office Tax Deductions - Continued

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Home Office Productivity | Home Office Ergonomics
Home Office Tax Deductions | Childproof Home Office

"REGULARLY AND EXCLUSIVELY"

You must use your home office regularly and exclusively. Your office doesn't need to be a separate room, but it does need to be used "regularly and exclusively" for business. This means that you need to keep all family activities and items away from your office. Keep your children off of your computer and your personal mail off of your desk, amongst other things. Additionally, if you have more than one business, you cannot use your home office for your other business. For example, if you are a salaried web designer, you cannot work on projects from your salaried job in your home office.

You have decided that you are eligible for a home office deduction. Now what? I would contact an accountant and make sure that you have made the right decision. Then:

a. Measure square footage of your entire home

b. Measure square footage of your home office

c. Divide office's square footage by your home office's square footage

d. This number is your percentage….Apply this percentage to indirect expenses, like your mortgage taxes, utility bills, real estate taxes, and upkeep. So, you can deduct a percentage of home-related expenses based on the percentage of space in your home that your home office takes up. So if your house is 5,000 square feet and your office is 500 square feet, you can deduct 10% off indirect expenses and home cost. Don't worry, direct expenses are still deducted in full. For example, don't use the percentage on things such as a business phone line.

e. Find out home purchase price and add to that all home improvements

f. Find out the value of land

g. Find out the market value of your home.

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