Accounting and Tax Center, Inc.
P.O. Box 20683 Roanoke, Virginia 24018 (540) 774-7400
2017 Tax Organizer
Business Use of Home – Both Regular and Simplified Methods
1. Area used regularly and exclusively for business, regularly and exclusively for day care, or regularly for inventory storage (square footage). / ______Sq. Ft.2. Area used only partly for day care (square footage). / ______Sq. Ft.
3. Total area of home (square footage) / ______Sq. Ft.
4 Daycare hours /
4a. Number of weeks used for daycare, if less than full year
4b. Number of days used for day care each week
4c. Number of days closed for holidays, vacations, etc.
4d. Number of hours used for daycare each day
5. If part of your income is from a place of business other than this home, enter % of gross income from business use of this home.
Business Use of Home – Expenses – Simplified Method:
ÿ Check Here if you wish to use the Simplified Method rather than the Regular Method. $5.00 X _____ Sq. Ft. = $ ______
Business Use of Home – Expenses – Regular Method:
Direct *
/Indirect **
1. Deductible Mortgage Interest /$
/$
2. Real Estate Taxes /$
/$
3. Insurance /$
/$
4. Repairs and Maintenance /$
/$
5. Utilities – Electric & Gas /$
/$
6. Other Expenses (list): /$
/$
$
/$
$
/$
* Direct = Affects only the business portion of home.** Indirect = Affects the entire home. / /
Additions/Improvements made to home this year (list): /
Date Acquired (MM/DD/YY)
/Cost
Description: / /$
/$
/$
/$
I use my home for business. Can I deduct the expenses?
To deduct expenses related to the business use of part of your home, you must meet specific requirements. Even then, your deduction may be limited.
Your use of the business part of your home must be:
· Exclusive (see *exceptions below),
· Regular,
· For your trade or business, AND
The business part of your home must be one of the following:
· Your principal place of business,
· A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or
· A separate structure (not attached to your home) you use in connection with your trade or business.
Additional tests for employee use. If you are an employee and you use a part of your home for business, you may qualify for a deduction. You must meet the tests discussed above plus:
· Your business use must be for the convenience of your employer, and
· You do not rent any part of your home to your employer and use the rented portion to perform services as an employee.
Whether the business use of your home is for your employer's convenience depends on all the facts and circumstances. However, business use is not considered to be for your employer's convenience merely because it is appropriate and helpful.
*exceptions
You do not have to meet the exclusive use test if you satisfy the rules that apply in either of the following circumstances.
· You use part of your home for the storage of inventory or product samples.
· You use part of your home as a day-care facility.
Optional safe harbor method
For those claiming a Home Office deduction there is a new Simplified Method for claiming the Home Office deduction.
While the home office deduction can still be computed in the same manner as before, many taxpayers may find a new optional safe harbor method less burdensome. Beginning in 2013, Revenue Procedure 2013-13 allows qualifying taxpayers to use a prescribed rate of $5 per square foot of the portion of the home used for business (up to a maximum of 300 square feet) to compute the business use of home deduction. Under this safe harbor method, depreciation is treated as zero and the deduction is claimed directly on Form 1040, Schedule C; Form 8829 is not used. Instead, two entries will be made directly on the Schedule C for the square footage of the home and square footage of the office which the taxpayer completes indicating their election to use the safe harbor option. Deductions attributable to the home that are otherwise allowable without regard to business use (such as qualified residence interest, property taxes and casualty losses) are allowed in full on Form 1040, Schedule A, as they are under the regular method.
Please review last year’s Form 8829. Multiply the square footage on line 1 up to a max of 300 times $5.00; that would be your optional safe harbor method for your home office. Compare this amount to the total of lines 25 and 29. If the safe harbor is larger that would be the better method. We will explain this method in more detail when you come for your appointment.
Page 1