How Americans Can Claim Up To $ 1,500 In Tax Relief For Working From Home

As many US companies put their return-to-office plans on hold amid various variants of Covid, employees continue to hide in their home offices.

With the 2021 tax year ending, it’s time to start thinking about whether you qualify for the home office deduction from the IRS.

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Americans Can Claim Up To $ 1,500 In Home Office Tax Relief

The home office deduction is available to owners and tenants.

It applies to all types of houses.

You also don’t need to have a dedicated room.

A home office could be a corner of your living room, as long as it meets both requirements.

Who is eligible?

The home office deduction is available to self-employed workers or business owners.

Regular employees cannot claim the home office deduction.

There are two basic conditions for your home to be eligible for a deduction.

You must regularly use part of your home exclusively for doing business.

For example, if you use an extra room to run your business, you can claim a home office deduction for that extra room.

In addition, you must prove that you are using your home as the primary place of business.

If you carry on a business activity outside of your home, but also use your home on a substantial and regular basis to carry on business activities, you may be entitled to a home office deduction.

For example, if you have face-to-face meetings with patients, clients, or clients at your home in the normal course of business, even if you also operate a business at another location, you can deduct your expenses for the portion. of your home used exclusively and regularly for professional purposes.

If you meet both of these requirements, it doesn’t matter whether your home office is in a house, condo, apartment, or garage.

In addition, you cannot claim a hotel room or temporary spaces.

How much can you get?

There are two methods you can use to determine the deduction for the business use of your home.

You can choose to use the simplified method or the regular method for any tax year.

For the simplified option, you can deduct up to $ 1,500 depending on the size of your home office.

You do not need to have a detailed statement of your expenses.

Your desk should be used exclusively for business, such as the corner of your living room.

If you have an extra bedroom and your friends sleep there during your visit, this is not eligible.

The deduction cannot exceed the gross income from the business use of the home less business expenses.

The regular method allows you to deduct the exact value of your expenses, but you must keep records of your expenses during the year.

You can also deduct a portion of expenses for your entire home, such as utility bills, based on the percentage of your total home’s area that is your office.

How can you claim this deduction?

How to claim the home office deduction on your tax return will depend on the method you use to calculate your deduction.

If you choose the simplified option, use the “Simplified Method Worksheet” in the instructions in Schedule C, then enter the value of your deduction on line 30 of Schedule C.

If you are using the normal method, you should use Form 8829 to calculate your exact deduction.

We show you how you can reduce your tax bill.

Plus, how to increase your tax refund.

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