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Is A Home Office Deduction Worth It For Me?

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I was reading an article in the WSJ’s Startup Journal about whether or not claiming a home office deduction was worth it, on a case by case basis, and what calculations you’d need to do in order to figure that out. Essentially the trade off is whether the extra time required to document a home office really makes the payoff worthwhile.

Here are essentially my costs for the year (given my home office is ~10%):

  • Electricity: $8/month
  • Insurance: $5/month

I also have the depreciation aspect of the room but in looking at it all, it doesn’t seem worth it for me to go through all that effort and risk the chances of an audit. Most of my expenses have nothing to do with my home and so I can claim them anyway (internet, computer costs, domains, hosting, etc.)

Source: Startup Journal

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7 Responses to “Is A Home Office Deduction Worth It For Me?”

  1. David says:

    I’m no expert on this, but my tax professor recently told us that, aside from the actual aspects of complying with the specifics of the code, claiming a home office deduction is a red flag that makes it much more likely you will be audited.

    • Terry says:

      It used to be a red flag, but no longer. So many people have a home office these days, it is the norm. As long as you are honest on your forms, what’s the worry?

  2. Sounds like you’ve been thinking a lot about taxes lately. I really liked “Tax Strategies for Business Professionals” by Sandy Botkin. It’s not cheap but has good tax information condensed down into bite sized chunks. Since it’s an audio series you can listen to it over and over until the details sink in.

    As I said, its not cheap, maybe there are other similar resources out there that are just as good for a lower price. I’d be curious to hear of some.

  3. Jonathan says:

    What about 10% of your mortgage?

    • Terry says:

      It would be 10% of the mortgage interest. Not the entire mortgage. But, if you didn’t write it off for your business, it would still go on your Schedule A. But reducing your Schedule C expenses is a good idea as self-employment tax can be expensive. That is, if you make a nice profit on your business, self-employment tax can be quite ugly.

  4. jim says:

    Can I claim a home office and NOT take the depreciation? I really just don’t want to have to keep track for the depreciation and recapture it later, my mortgage is around $1600 and so the deduction would be around $1920 a year.

  5. John says:

    Can I claim a home office and NOT take the depreciation? I really just don’t want to have to keep track for the depreciation and recapture it later, my mortgage is around $1600 and so the deduction would be around $1920 a year.


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