In this episode, Jeff discusses:
- How does the home office work and what are the rules
- The importance of using the home office deduction
- Home office audit issues
- S-corporations or partnership home office deductions
Key Takeaways:
- Two requirements must be met by your home office in order for it to be your primary place of business: you use it exclusively for administrative or management activities of your trade or business and you do not operate your trade or business from any other fixed location.
- You may be able to earn mortgage interest with a home office. For most people, mortgage interest isn't a write-off any longer. The higher standard deductions on your personal tax return have led to 95% of taxpayers using the standard deduction instead of itemizing and claiming mortgage insurance. However, you can now claim it again when you set up a home office.
- There's no reason for you to be afraid to use the home office on your taxes - having a home office does not increase your chances of being audited.
- S corporations can reimburse you for the costs of a home office when they set up an accountability plan for employee business expense reimbursement - you complete the home office reimbursement sheets for them, and they reimburse you.
“I don't know why any real estate agent wouldn't have a home office. Why would you want to miss out on all those miles? Normally, I have found it comes down to two reasons: either they don't know, or fear." — Jeff Hockett
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