Tax Loophole Alert!
Save up to $500 of tax!!
Did you work from home in 2020?
So many of us did.
Did you have a business that you worked from home for?
Here's how to deduct expenses related to your HOME OFFICE.
***Thread***
Save up to $500 of tax!!
Did you work from home in 2020?
So many of us did.
Did you have a business that you worked from home for?
Here's how to deduct expenses related to your HOME OFFICE.
***Thread***
1) You do not need a business entity (LLC, Corp, etc) to take deductions for your home office. You just have to be engaged in a profit seeking activity.
If you have a business - even a small side hustle - you just need to meet the following two requirements:
If you have a business - even a small side hustle - you just need to meet the following two requirements:
2) Space in your home should be used as:
- The principal place of your business.
- Used regularly and exclusively for your business.
- The principal place of your business.
- Used regularly and exclusively for your business.
3) The principal place of business test.
-You use it exclusively and regularly for administrative or
management activities of your trade or business.
-You have no other fixed location.
If this is your only real property workspace, you should be good on this test.
-You use it exclusively and regularly for administrative or
management activities of your trade or business.
-You have no other fixed location.
If this is your only real property workspace, you should be good on this test.
4) The exclusive use test.
The space needs to be identifiable and not used for personal use. A nice exception to exclusive use is if you are storing inventory in your home.
Examples:
The space needs to be identifiable and not used for personal use. A nice exception to exclusive use is if you are storing inventory in your home.
Examples:
5) Not exclusive use:
-You lay on your couch with your laptop.
-You work at your kitchen table.
These are predominantly personal use spaces you are just doing business in.
-You lay on your couch with your laptop.
-You work at your kitchen table.
These are predominantly personal use spaces you are just doing business in.
6) What should qualify as exclusive use:
-A room in your house that is a devoted office.
-A identifiable corner of a room that is used exclusively for work/business.
-A room/closet/storage area that your regularly store your flipping inventory.
-A room in your house that is a devoted office.
-A identifiable corner of a room that is used exclusively for work/business.
-A room/closet/storage area that your regularly store your flipping inventory.
7) What expenses are deductible.
Two methods you can use to calculate the deduction:
-The Simplified Option - Deduct $5/square foot of home use (can be up to 300 square feet - whatever you are using).
This is incredibly easy and does not require expense tracking.
Two methods you can use to calculate the deduction:
-The Simplified Option - Deduct $5/square foot of home use (can be up to 300 square feet - whatever you are using).
This is incredibly easy and does not require expense tracking.
8) - Track all of your home expenses and allocate a % of them.
For example mortgage interest, insurance, utilities, repairs, and depreciation.
Add those up and if you are using 5% of your house (by sq ft) for your business, then you can deduct 5% of those costs here.
For example mortgage interest, insurance, utilities, repairs, and depreciation.
Add those up and if you are using 5% of your house (by sq ft) for your business, then you can deduct 5% of those costs here.
9) Note if you are already deducting some of these costs as an personal itemized deductions, you cannot take them twice.
You might be better off with the Simplified Method.
You might be better off with the Simplified Method.
10) What if I rent my house or don't own it?
You can apply a % of your monthly rent, insurance, utilities, etc to your business.
Simply add up all of your costs of renting and apply a % of how much exclusive business space you have in your rental and deduct.
You can apply a % of your monthly rent, insurance, utilities, etc to your business.
Simply add up all of your costs of renting and apply a % of how much exclusive business space you have in your rental and deduct.
11) If you rent, you should also be able to use the Simplified Method described above, i.e., deduct $5/square foot of exclusive use space in the property you are renting.
12) How to take the deduction.
Once you find you qualify and calculate it, it will be filed on Form 8829. Don't worry about this though - you tax preparer will take care of it or your tax software will automatically lead you there.
Once you find you qualify and calculate it, it will be filed on Form 8829. Don't worry about this though - you tax preparer will take care of it or your tax software will automatically lead you there.
If you found this helpful, please like or RT to share.
Also, check out my 121-guide below with 60 more threads like this to help you save $1,000s of tax! I'm giving it away for $27 right now, but the price will never be this low again!
gumroad.com/l/MbBbDf
Also, check out my 121-guide below with 60 more threads like this to help you save $1,000s of tax! I'm giving it away for $27 right now, but the price will never be this low again!
gumroad.com/l/MbBbDf
β’ β’ β’
Missing some Tweet in this thread? You can try to
force a refresh
γ
