Tax Write-offs for Home Based Business

[michiganian]

I use a portion of my home for the inspection business (13%).

Is there any portion of improvements made outside the office area that is deductible?

[charlieb]

As has been said before........call an expert you trust. Your clients do.

CPA

My answer ..... I think not, but hay what do I know about taxes!

[Nolan Kienitz]

Mark,

Don't mess with your taxes. Let your CPA do all the calculations to keep all numbers "above board". You don't want to invite any visits from the IRS

It is worth the peace of mind.

[Bill Kibbel]

I use a portion of my home for the inspection business (13%).

Do clients walk in off the street to do business at that 13%? Do employees work out of that space?

-or-

Is it a space where you have a phone, computer, copier, answering machine and some file cabs?

It makes a big difference in an audit.

[chicago]

Jackson hewitt just made big news here in chicago today for padding returns and taking kick backs off the xtra refunds,so tread careful as that war don"t pay for itself.

[kurt]

I have a substantial "real" home office that is clearly defined, has a separate entrance where customers can enter, and it even looks like an office.

I've figured the deduction dozens of times and it always comes out to about $300; not worth the hassle & increased likelihood of an audit by claiming a home office.

[hausdok]

Hi,

I figure about $2400 a year plus cost $360 cost of water, electricity and heat, cuz my wife makes me pay her $200 a month for the use of one bedroom as an office plus $30 a month to cover the cost of the electricity, heat, water I use and the trash I generate.

If she had her druthers, I'd be working out of my car, or renting an office someplace else, and that bedroom would be ready and prepared for when relatives/friends come to stay for a visit - not crammed ceiling to floor with books, office machines, desks and samples of all manner of house stuff, thus necessitating that she make up the sofa when they come.

Think about what the overhead will cost you to rent and work out of a separate office, and $2760 a year is a drop in the bucket and a 'reasonable' business expense. Which would the IRS rather grant you - an $18,000 to $24,000 a year deduction or one that's less than $3000 a year?

ONE TEAM - ONE FIGHT!!!

Mike

[kurt]

Better to do it Mike's (or the Korean's) way; set up an S Corp, and have the Corp pay you (the property owner) rent. The rent is fully deductible.

Justifying a home office deduction is slightly tricky; paying rent isn't.

[Jim Morrison]

Except that the rent your corporation pays you is taxed as personal income.

Caveat inspector: HI's who act on tax and legal advice received from other HI's often find the free advice prohibitively expensive.

[Chad Fabry]

My corp(me) rents space from Chad (me) which is taxed as ordinary income for Chad (me).

The beauty is that it's NOT earned income and it saves the corp(me) 7.5 % SS tax and Chad(me) 7.5% SS tax.

I'm no accountant but if Chad(me) and the corp(me) were to get together they(I) save a total of 15% SS tax.

The fact that I earn very little money takes care of the taxable income part nicely. If my damn rent was less I could earn more...

[Les]

A real deal inspector office will cost you in the neighborhood of $80-100,000 per year. I have had a seperate office for abt 20yrs now and it has been worth it. One intangible is that I can, and do, go home every night and leave everything at the office. I get approx 4 calls per year at home.

I agree with Kurt M, unless you want to get really tricky it is a deduction that most should forego.

Consult your CPA and if you don't have one - get one, they are cheap.