Tax Information With A Mother's Touch
Published by Eva Rosenberg, MBA, EA
Volume 6, Issue 270 August 6, 2004
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Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 6, Issue 270 August 6, 2004 |
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 » From: Los Angeles, CA Dear TaxMama: I want to take the home office deduction. I am a computer programmer, I do web development. I use about a third of my apartment exclusively for business. I have 4 computers, routers, cable modems, 2 printers, a scanner, and a video cam set up for video conferencing with customers. I have 3 bookshelves filled with computer books, and spare hardware stored in the closet. I have 2 desks and 2 phones, a personal phone in the private side of the apartment and a business phone I keep in the office area. I never use the office area for personal use, my family visits me in the kitchen or they sit on the couch by the dining room table --- the office part is far too crowded for that and I don't allow any liquids in the office unless you are drinking plain water out of a tightly capped sippy cup. Which no one wants to do. I have a bedroom where I sleep. What I'm worried about is will the IRS think I'm a scammer when they find out my apartment is only 1100 square feet and my office takes up 450 square feet? It is small, I know, but that is all I can afford here in Los Angeles, and my office is very very important to me. Do they let people in small apartments have home businesses? I really, really do, and I work 10 or 12 hours a day to keep my business going. Is there any chance I can take this deduction without being a big homeowner with a high income? Peggy  Hi Peggy, Don't worry your clever head. You bet your sweet bippy you can take that office in home deduction. Just to protect it, though, take photographs of your work area, and do a schematic of your place, marking the areas that are exclusively office. Use Form 8829 to report the expenses - rent will go on the line that says OTHER. Really, Peggy, don't worry. I've run my business out of my home for years, off and on. IRS won't audit just because you're at home. Besides, most people in your industry work from home. They will audit if you keep showing losses all the time. But if it's a real business that's supporting you - you'll have a profit - otherwise you wouldn't have the funds to pay the rest of the rent, utilities, food and clothing. You know, the Small Business Taxes Made Easy book that's coming out this fall is perfect for you. It will give you everything you need to know to run your business, taxwise - and how to avoid being audited. And it will tell you exactly what to do in case you ARE ever audited. You can probably pre-order it from Amazon or McGraw Hill now. Or wait ... I am trying to arrange a special deal for my own friends. Incidentally, you may want to listen to a F-R-E-E teleconference about tax tips and organization tools for small and Internet business. Don't you think it's about time that IRS added a business code for the Schedule for NERD? People like us, working from home in the environment you describe (much like mine), and the same hours ... there are lots of us out there. Just code us WorkNerd and IRS would know we really live like that. That, alone would avoid lots of audits. Best wishes, Eva Rosenberg Your TaxMama  |
 
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| Library of Congress - ISSN 1532-0790 Copyright © 2000-2007 - Eva Rosenberg |
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