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Working from home? Five things you can deduct on your taxes | Business

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Working from home? Five things you can deduct on your taxes

The following was sent to us by Cher Murphy of Cher Murphy PR:

FALLS CHURCH, VIRGINIA – According to the U.S. Census Bureau, roughly 5.9 million people work at home throughout the country. With this becoming such a popular option, and the end of the year fast approaching, it is a good idea to know what you can deduct on your taxes.

“People often have a difficult time determining exactly what they can and cannot deduct on their taxes when it comes to working from home,” explains Tariq Shafi, a practicing certified public accountant with Shafi and Company, who is also an adjunct professor of accounting, auditing and taxation at Stratford University. “But if you take the time to get it right, it can make a big difference in the amount you pay at tax time.”

While those who work from home can deduct a variety of things, here are some of the most popular deductions:

  1. Home office. You may qualify for a home office deduction if you have a space that is used exclusively and regularly for work purposes. This means, if you have a dedicated home office, that you can usually qualify for the deduction. But if you have a laptop set up at the dining room table, you can’t.
  2. Home care expenses. If you qualify for a home office deduction, then you can claim a portion of all home care expenses, as well. For example, if your home office amounts to 10 percent of the square footage of your total home space, you can deduct 10 percent of all your home care bills, including utilities, mortgage interest, real estate taxes, home security, maintenance and even lawn care. You can even deduct depreciation, because the home office is considered a structure that is used for business, just like a separate brick-and-mortar office would be.
  3. Supplies. Home offices need supplies in order to operate. Keep the receipts for items that you buy to keep it running, as they can be deducted, especially items like copy paper, pens, file folders, etc.
  4. Internet access. If you use your computer for work purposes in your home office, you can deduct your Internet access. This is especially helpful for people who conduct their business online or use the computer for online research or even work-related e-mail.
  5. Subscriptions and memberships. If you do any kind of research for your work-at-home career, or just want to keep up on the field, your magazine subscriptions and memberships to professional organizations can be tax deductible.

Additionally, it is important to note that if you have expenses that affect only the business part of your home, such as painting and repairing the home office, you may deduct a 100 percent of the bills, since they are "direct" expenses. You don't have to do a pro-rata share. Also, The IRS puts a limitation on your home office expenses. Such expenses cannot exceed the business income from the home office. 

“The silver lining is that you may carry forward these excess expenses next year and deduct them from business income of the following year,” adds Shafi. “If you are not sure whether you qualify for these deductions, ask an accountant before claiming them. The deductions are available, but you need to be sure you are taking the right ones, and that you’re taking advantage of all of those for which you qualify.”

Stratford University offers a variety of degree and non-degree programs in the areas of business and accounting, including a diploma, certificate, associate degree and master’s degree. The programs in business and accounting are offered both on campus and completely online.