5 Home-Office Tax Deductions You May Have Overlooked
Looking to maximize your business deductions this tax season? If you work full-time or even occasionally from a dedicated home office, you can take advantage of a few lesser-known IRS tax write-offs.
Here are five deductible expenses you may have overlooked:
- A percentage of your property-related payments — If you use 25 percent of your home’s entire square footage as an office, you may claim 25 percent of your mortgage interest or rent payments, insurance premiums, and property taxes in tax-deductible expenses. You may deduct the same percentage of your utilities payments, which may include telephone services, electricity, gas, and cleaning services.
- Office furniture and décor — Beyond your computer and other work-related equipment, you may claim a tax deduction for your desk, chair, coffee table, and even the expensive art on your wall. Make sure that any decorative item you deduct stays in your office, to avoid potential audit woes down the line.
- Physical repairs and improvements — Did you paint your office or redo its floors? Repairs and improvements to your workspace are tax-deductible, though some larger expenses (such as new carpet) may be subject to an asset-depreciation schedule.
- A business phone line or business-related calls — Although you may not take a tax deduction for maintaining a primary phone line, you may claim a separate business line. If you use a single line for business and personal calls, you can itemize the business calls and claim those as a deduction.
- Other home-related expenses — The average homeowner or renter incurs home-related expenses beyond rent or mortgage, which may include snow plowing, roof repair, and trash removal. These types of expenses are also deductible, according to the square-footage percentage of your home used as a business.
A word of caution: It’s easy to get overzealous in claiming home-office tax deductions, and improperly classifying expenses is an easy way to trigger an audit. When filling out your tax returns, carefully go over the IRS documents related to home-office tax deductions, and talk to an accountant about what you should and shouldn’t claim based on your circumstances.
Kathryn Hawkins is a business writer for Intuit and is passionate about solving small business problems.