Carol A. Reithmiller, CPA, PLLC

Phone: (704)583-9090
Fax: (704)583-9843
Email: info@ladycpa.com

Address:
11020 South Tryon Street
Suite 406
Charlotte, NC 28273

Office Hours:
Monday - Friday
9:00 AM - 5:00 PM

Home Office Deduction

If you're self-employed and work out of an office in your home, you should know about the strict rules that govern whether you can deduct your home office expenses.

You may deduct your home office expenses if you meet any of the three tests described below: the separate structure test; the place for meeting patients, clients or customers test; or the principal place of business test. You may also deduct the expenses of certain storage space if you qualify under the rules described further below.

Separate structures. The easiest test to meet allows a deduction for the costs of a separate unattached structure on the same property as your home--for example, an unattached garage, artist's studio, workshop, or office building--that is used as a home office. To qualify for the deduction, the separate structure must be used exclusively and on a regular basis in connection with your business.

Home office used for meeting patients, clients, or customers. Alternatively, you may deduct your home office expenses if you use the home office exclusively and on a regular basis, to meet or deal with patients, clients, or customers in the normal course of your business. The patients, clients or customers must be physically present in the home office. Telephone calls to them from your home office won't do the trick.

Principal place of business. In addition, you may deduct your home office expenses if you use your home office, exclusively and on a regular basis, as your principal place of business. The meaning of "principal place of business" has been the source of many disputes between IRS and taxpayers. The current rules for determining a taxpayer's principal place of business were laid down by the Supreme Court in its January 1993 decision in Soliman, which was widely reported in the media. But Congress, in the Taxpayer Relief Act of 1997, has altered some aspects of the "principal place of business" test in favor of taxpayers, starting in 1999.

I am prepared to assist you with advice about any of the issues discussed above. Please e-mail me if you would like to discuss this (or any other) matter.