Do you work from home? If so, others share your situation. The U.S. Small Business Administration says 60.1% of all firms without paid employees are home-based. The same ca be said for 23.3% of small employer firms, and 0.3% of large employer firms. Work from home? Determine whether to claim a home office deduction, which effectively transforms some personal expenses into business write-offs.
Make Sure You Qualify
There are two tests to pass before you can figure a home office deduction:
Test one: You must use the space in your home as your principal place of business. You meet this test if you do substantial administrative work at home even though you conduct business outside the home (e.g., at customer locations), provided you don’t maintain an office other than in your home. Alternatively, the home office satisfies the test if it’s used to meet with customers, clients, or patients in the normal course of business even though you have another business location. A free-standing structure, such as a studio or greenhouse, can also be a principal place of business.
