<p>Any CPA’s out there willing to answer a few free questions for me?</p>
<p>My work has announced that our department will be working from home and telecommuting as of next year because they are cutting down on office space and there will no longer be room for us in the office. I have heard there are possible deductions for having a home office in your house but am not fully familiar with them… I am not sure if this even qualifies as a time where you could do this and I would hate to do it and then get audited and find out I was in the wrong!! I would be setting up an office in one of my unused bedrooms and only using it as an office - I want to feel like I am working at home as opposed to living at work, if that makes sense. </p>
<p>I googled it and found some information but was not fully clear. </p>
<p>Can anyone provide any insight on this for me?</p>
<p>The rules keep changing on this issue. I hope your business will provide info for you. One of the important things to maintain is that “home office” presence–not the “guest room, baby room, home office presence”.</p>
<p>It’s obviously not going to hurt anything if I can’t claim any deduction - I’ll be spending more on heating and A/C as i currently have programmable thermostats and set it to be different while I’m away at work… but will be saving money on gas and possibly on car insuance with a 0 commute… so it’s probably a wash) but I think I’ve heard it mentioned in passing and it seems silly to leave money on the table if it is indeed something deductible.</p>
<p>right, I would be having just the office in that room. It’s currently a guest room but I think what I’d do is move my master bedroom to my second floor, and then my guest room into my current bedroom, then turn the current guest room into an office for work. I currently don’t use either of the bedrooms on my second floor (and they are actually the biggest in the house) and it seems like such a waste of space… but up till this point I’ve been too lazy to make the trek up the stairs each day!!</p>
<p>The hardest test is the space must be used for exclusive use of the business. So, is the business providing you with a computer, and will you use the computer for personal use? Or only business use?</p>
<p>Or would you use a personal computer that you use for personal while not at work? Is there any use of the office that would not be for work?</p>
<p>My work provides a bundle with a work router, a computer, monitor, printer & a voip phone. We have to provide the desk, chair, filing cabinets, etc. I wouldn’t be using my work computer for anything non work related… we can’t even get to facebook or gmail through our work network. </p>
<p>I really don’t think anything would be not for work in there. I just measured it and it’s 132 square feet - my house is 1542 square feet total - so it’s only 8.5 percent of my house square footage.</p>
<p>The other big question is if this makes you an independent contractor, in which case you are responsible for your own SS payments, etc. You can deduct far more from your expenses in that situation. Be sure to find out about this so you can plan financially. Otherwise, you will have a reduction in pay when you are paying the employer portion of social security and medicare tax. Many businesses are unloading employees into this situation, and it can stink financially. Good luck to you.</p>
<p>Caveat: I am NOT a CPA, but I have done my own taxes for almost 50 years, including self employment (for myself, my children, my husband).</p>
<p>No we’re not independent contractors - still regular employee’s. We have about 1/3rd of our 1500 employees who currently work from home. I’m excited because I love my current work from home days… but I know i’ll miss seeing everyone in the office.</p>
<p>Perhaps choose the upstairs room for the office, energetically go up & down the stairs often during the day, you might get in better shape. Not saying you are or are not in good shape now, just that the stairs built into your day provides an easy way to add some exercise to a sedentary job.</p>
<p>somemom - I actually thought of that however my upstairs rooms are very awkward - it’s two bedrooms that are ‘joined’ together - together it is about 40 x 16 feet - so I think it would make a really really nice master bedroom on one half (22x16) with a sitting room (with my regular computer), a couch and all of my bookshelves / large closet on the other half (18x16) and a stairwell/built in bookshelves in the middle. If i put my office on one side I wouldn’t really know what to do with the other half. </p>
<p>It’s still all up in the air though. One thing I dislike about the upstairs is it’s slightly warmer in the summer and slightly cooler in the winter. I wish the heating would be a little more regular. I’m hoping once I get my central air and furnace cleaned this fall it will regulate it a bit better.</p>
<p>I like the idea of going up and down the stairs for work however I do actually already exercise each day in my attempt to keep myself 120 lbs, lol :)</p>
<p>I think that the space makes it hard it sounds like, but another benefit of moving upstairs would be that it’s easier to close down at the end of the day. You simply walk downstairs to “go home.” And if it’s upstairs, you have to actually “go to work” by climbing the stairs whereas if it’s on the same level as the rest of the house you could easily come and go throughout the day…</p>
<p>First you have to pass the “exclucivity” test as others have mentioned. Sounds to me like you do. </p>
<p>After that hurdle is passed, then you determine the square footage of the room vs. the square footage of the home, assuming you own the home.</p>
<p>Then you take that percentage of things like interest, taxes and utilities. Keep in mind that you already deduct interest and taxes. This just moves it from one line to another on your schedule A. </p>
<p>Then you take depreciation on the room. This is not an option. If you take office in the home, you MUST claim depreciation. </p>
<p>Then you add up all those expenses. If they exceed 2% of your AGI, you deduct the excess, assuming you have enough in other deductions to itemize. </p>
<p>Also, when you sell the home, you must recapture the depreciation and the portion that is business use is now no longer available for not being taxed because it’s not your main
home.</p>
<p>Thanks that helps a lot. I’m curious about how a room depreciates and how to even value that.</p>
<p>I do own the home. so I guess I worlds add up my mortgage, utilities (does internet count as a utility?), then take 8.5 percent of it and whatever is more then two percent counts?</p>
<p>One thing that I was told when I started working from home is that having home office deductions is one of the top reasons for being audited. For 8% of your total home space, is it worth the deductions, probably not. Since your company will be paying for your internet, etc. you could deduct 8% of your electric/heat/ac, etc. bills too, but again, is it worth it? Now, in your case since your company is moving you home, along with a lot of other people, an audit would go pretty smoothly as long as you have all the documentation. Add up what 8% of your bills would have been last year and see if it is worth it.</p>
<p>They don’t pay for the internet. I think I can just use my existing internet connection though i’m actually about to call and upgrade it. </p>
<p>I’ll have to add it up and see if its worth it. The excess if two percent part is I think what might not make it worth it but again I’ll have to do the math. I appreciate every ones input. Usually what they do in other departments when they’re trying to clear space in office they put up a posting saying they need thirty five people and they take volunteers based on performance. This one is just all of my department in our location. I still may have to go in to our corporate office every now and then like currently (maybe ten times a year, thankfully its only an hour away)and they do pay travel costs for that.</p>
<p>We were laughingabout how we have such nice wardrobes and nowhere to wear them!
Sent from my DROID BIONIC using CC</p>
<p>They should pay for your internet and give you an allowance for extra electricity, etc. if they are requiring you to work from home…but that doesn’t always happen and being able to work from home is wonderful!</p>
<p>I’ll have to check and see if we can put internet on our expense reports. I have a work cell to but that one has the bill sent directly to work so I don’t gave to deal with it.</p>
<p>I’ve deducted home office expenses for 15 years - no audits yet. Our tax software figures it all out. I just plug in the numbers it asks for. Even though it’s a tiny room, it really does make a difference on my taxes.</p>
Not saying you are or are not in good shape now, just that the stairs built into your day provides an easy way to add some exercise to a sedentary job.</p>