Written by attorney Scott M Estill

Home Office Rules

All taxpayers who claim a home office deductionneed to make sure they have excellent records to support the tax deduction. For instance, if you meet clients or customers in your home office, you must use a log or some other means (such as a detailed day planner oryourtax tracker) to record just who was present and when the meetings occurred. Remember, it is up to you to prove to the IRS, using records and testimony, that your use of the space claimed is“regularly" and“exclusively" used for business. I would recommend having your home address/office printed on your business cards if you meet with clients at your home.

Forstorage space,make sure you can prove the exact area that is used for the storage of files, inventory or other business products. This can be as simple as a display rack for your products or a stand-alone shelving unit with your merchandise. It is helpful if it is separated from the rest of the room in order to make this a bit easier to support. The rules state that you can claim a deduction for storage space if all of the following are satisfied: (1) the products or inventory must be used in your business; (2) your business involves the selling of these products; (3) your home is your only business location; (4) you use the storage space on a regular basis; and (5) the space is suitable and separately identifiable. It may be a good strategy to photograph the storage areas or office space for future proof if an audit should occur. Make sure you follow these rules and your tax deduction for the home office will be secure!

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