Last September I built an addition onto my house that includes an
office that I use for work 10-20 hours/week. Now tax season is upon
me, and I'm very confused about my situation. Has anyone here built
an office onto your house? I think there may be deductions that I'm
now eligible for. I'm just not sure where to start. Did I mention
that I'm not very good with taxes?
Also, can anyone recommend a good tax website that allows e-filing
and can handle more complicated returns?
p.s. I'm aware of misc.taxes, and I will ask there too. From what I
can tell, that group is knowledgeable about general situations, but
can't usually help with specific ones. That's why I posted here
first. Sorry if anyone finds it off-topic!
There are deductions you can take for a home office, but unless you use that
space *exclusively* for a home office (among other requirements), you'll
probably have the whole schmoo disallowed if you ever get audited. And a home
office deduction is a prime audit trigger.
- Nehmo -
Does what it says it does. You could also use TurboTax and do it
yourself. You can get a copy via eMule http://www.emule-project.net/ or
- James H -
- Nehmo -
You could have crossposted. Does Verizon allow that? AOL didn't (and
might still not) a while ago.
- James H -
- Nehmo -
Not really true. It's a good NG for any kind of tax question.
Hire a professional accountant - the area that you're getting into is a real
rat's nest of legalities, many of which can play to your advantage. I own
two businesses and am partnered in a third, and my accountant has, so to
speak, saved my cookies on more than one occasion.
The wording by the IRS is that the space must be used "regularly and
exclusively", that is to say used solely for business and nothing else.
Generally the deduction is proportional to the square footage of the entire
home, although there are limits based on your total taxable income from all
sources. If you shared the space with home activities such as I did last
year, there is no home business deduction whatsoever. The space must be used
exclusively for business and nothing else on a regular basis. Both Tax Cut
($19.95 downloaded) or Turbo Tax at $59.95 will do an acceptable job
complete with e-filing. I'm not familiar with other software, although I
understand there are many other good programs out there. See Publication 587
at http://irs.gov.com If you are uneasy about it, see a tax pro. If it is
new construction, you may be able to depreciate part of the construction
cost but that can be a can of worms if you sell. Then you are selling your
home and selling business property. My opinion, it's not worth it for a 20
hour a week business.
This used to be a thorny section of the tax code, but then a tax court
ruled that the traditional deduction was broadly invalid -- so Congress
changed the law to make it official. There's now an actual form you can
use which flows to Schedule A, Form 8829. You enter the expenses for
your home (utilities, etc.), define the office as a percentage, pro-rate
the expenses, and that is your deduction. (Of course, you must also
itemize and have sufficient Schedule A deductions to make it worthwhile,
but homeowners almost always qualify.) You probably also need to do a
4562 to depreciate the value of your home.
Links to all certified providers. But if your return is complicated
you're probably better off using TurboTax rather than working online
(which is best for simple, standard returns such as the 1040EZ.)
> From what I
Well, I don't know that we can be of any more help. But ultimately these
are complicated questions and you should consult a tax professional as
well as run specific questions past the IRS. (If the IRS tells you to do
it, you can be off the hook for certain penalties.)
I doubt you can deduct anything this year, since you've only been
using it since Nov. and don't use it as your principal place of
business. You should look around on irs.gov for details just in case,
though. As for tax sites, I'm a recent convert to TaxBrain.com. This
was my first year using it, and I was blown away by how simple it made
everything. My tax situation is kinda complicated too, but I still had
no problems figuring it all out. Good luck!
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