Take backdoor home office deductions
If your main place of business is a downtown office, you may not be able to claim home office deductions.
Strategy: Go through the “back door.” There are three key ways you can deduct home office expenses even though they don’t otherwise qualify.
Generally, you can deduct home office expenses only if you use the office regularly and exclusively as your principal place of business or a place where you meet or deal with customers, clients or patients in the normal course of business. Also, if you’re an employee, you must use the home office for the convenience of your employer. However, there are a few notable exceptions to the general rule.
- Section 179 Deductions. Even if you don’t qualify for home office deductions, you can still deduct certain business expenses-such as supplies, furniture and equipment-you buy yourself. Instead of depreciating the costs over several years, you may claim the instant Section 179 “expensing” deductions for these items. But remember that unreimbursed employee business expenses must be deduction as miscellaneous expenses, subject to a floor of 2% of adjusted gross income (AGI).
- Storage space. Maybe you use a spare bedroom to store products or samples that you sell. The tax law permits you to deduct expenses attributable to that storage space if your home is the sole fixed business deduction. Separate Structures. If you perform business activities in a separate structure on your property-for example, a detached garage, barn or backyard shed-you can deduct home office expenses attributable to the building’s business use. The separate structure doesn’t have to be your principal place of business or a place where you normally meet clients.