Home office deduction

The IRS tax code allows many home office deduction. However, each home office deduction needs to be done properly. When making a home office deduction, you need to keep every record of the home office expense you want to deduct.

If you hire a CPA to prepare your taxes, then you would give the CPA or tax preparer all the records and evidence of your qualified home office expenses and he or she will help you do the home office deductions. Is you are using one of the tax softwares such as Turbo Tax or Tax Cut to prepare your taxes, then you need to input all the necessary home office expenses for the software to calculate your home office tax deduction. This is simple enough. However, if you prepare your own tax filing manually, making a home office deduction may be abit more complicated.

Where to deduct home office deduction?

Home office deduction for employees

Employees do not compute their home office deduction on IRS tax Form 8829, Expenses for Business Use of Your Home. Instead, employees with home based business should use the special worksheet in IRS Publication 587, which largely follows IRS tax Form 8829.

IRS tax form 2106 and IRS tax form 2106-EZ

An employee' s home office deduction is entered on IRS tax Form 2106, Employee Business Expenses, or IRS tax Form 2106-EZ, Unreimbursed Employee Business Expenses, if an employee is otherwise allowed to use this tax form. Then the home office deductions from IRS tax Form 2106 or 2106-EZ are entered on Schedule A of the tax return as miscellaneous itemized tax deductions subject to the two-percent-of-adjusted-gross-income floor.

A home business owner who leases home to employer

Note that if a home based business owner leases his or her home to the employer, the home business owner cannot take any home office deductions (other than the mortgage interest, real estate taxes, and casualty and theft losses allowed to all homeowners).