If you’re a professional writer who works from home, you may have considered writing off your home office as a tax deduction. Keep in mind, however, that the IRS is particularly sensitive about home office write-offs, in part because so many people abuse the deduction. Your home office write-off is not necessarily the “red flag” that some people believe it to be. So if you’re going to write off your home office, it requires honesty and an understanding of tax laws. As long as you are legitimate in your reasons for writing off your home office as a tax deduction, you shouldn’t have to worry about raising any “red flags” and attracting unwanted attention.
First and foremost: Talk to your accountant. The advice that we can give you is generalized and doesn’t apply to every circumstance. It’s important that you consult a professional who is intimately familiar with your situation in order to make the right decision. That said, here are some general guidelines to keep in mind if you’re thinking about claiming your home office as a tax deduction.
The Traditional Way To Write Off A Home Office As A Business Expense
In the past, writers have been able to use the expense method to claim their home office deductions. To do that, a writer must be prepared to tackle some difficult calculations and judgment calls to determine the final amount that can be written off for a given office space. This includes calculations regarding utility bills, rent, homeownership, mortgage interest, real estate taxes, depreciation, and other elements.
The New Way Of Writing Off Your Home Office
At the time of this writing, the IRS has changed the rules in order to make your home office write-off a little bit easier. Instead of making complex calculations, writers can use this shift to a simplified method and answer a series of straightforward questions. Then, the writer multiplies the home office square footage by the going rate—and voilà! The answer is the amount that can be deducted.
Of course, there are some caveats. Right now, the rate is five dollars for every square foot of home office space, up to a maximum of 300 square feet. If you write off more than $1,500, or if your office is bigger than 300 square feet, you may want use to the traditional method.
Whichever method you select, be sure you choose carefully. Once you decide how you are going to calculate your deduction, you can’t change your mind afterward.
Your Home Office Deduction: Exclusive And Regular Use
Before you can write off your home office, you first need to determine whether or not you qualify to write off any of your creative writing expenses. To do that, check out our article on the subject: Creative Writers And Tax Write-Offs.
Keep in mind that your home office must be used exclusively as an office—it is not also a guestroom, it doesn’t have a pool table in it, and it certainly doesn’t have a television (unless your business involves using a television in some way).
And you must also use your home office regularly: In other words, your home office must be your primary place of business—not a corner of your house with a computer that you rarely use or a room in your house that you use as your office when you’re not using your off-site office space.
To learn more on the subject of write-offs and tax deductions for home offices, visit the IRS website and check out Business Use Of Your Home.
Photo by Gregory Han
QUESTION: Are you going to write off your home office this year?