Time to plan for next tax season. If you keep records, schedule appointments and carry on other such activities from your home office, some common home-office expenses, such as utilities, insurance, repairs, cleaning and depreciation, may qualify for a deduction, even if you do the actual work in another location. Be aware, however, any depreciation claimed after May 6, 1997, will be taxed at 25% if the residence is sold for a gain, whether or not the property has been converted to personal use.
Starting in 2013, there is a simplified home office deduction calculation to bypass maintaining detailed expense records. Simply deduct $5 for every square foot of home office space used, up to a maximum of 300 square feet or $1,500. This simplified expense is recorded on Schedule C rather than Form 8829 which allows you to separately deduct mortgage interest and real estate taxes on Schedule A.
TAX TIP: If you (or your family) use your home office for non-business purposes, it cannot be claimed on your tax return. To claim home-office deductions, the space must be used exclusively for business purposes.
Disasters Hurt: Get What You Deserve At Tax Time
If you lost property due to an accident, storm, fire, flood, drought or other unforeseen occurrence, you may not have to report insurance proceeds if you use the proceeds to replace the property within a specified time. Additionally, if the home was located in a federally declared disaster area, you can claim the loss on your tax return in the year of the loss (2015) or for the preceding year.
TAX TIP: Local and state property taxes may also be abated in some cases. Consult IRS Publication 547 “Casualties, Disasters, and Thefts” to find out more.
We are here to help. Just let us know. 910-202-3607 or firstname.lastname@example.org