Today TaxMama hears from Larry in the TaxQuips Forum, who wants clarification. “Though I derive the majority of my guitar teaching income from teaching at a local music store, can I still write off home/office deductions for the smaller part of my home lessons? If so what percentage, and how is that addressed on the various tax forms? https://taxmama.wpengine.com/forum/taxquips/music-teacher-home-office-question
Dear Larry,
While I wish I could give you a quick and easy answer, this is a two-hour lesson in TaxMama’s EA Exam Review Course. Even then, we only scratch the surface. https://irsexams.com/live-ea-exam-review-course-registration/#part2
Read Chapter 7 of Small Business Taxes Made Easy. It explains how to get the highest legal deduction. In fact, the IRS staff who read that chapter before it was published said it provided much more clarity than their own publications. https://taxmama.wpengine.com/small-business-taxes-made-easy/
To qualify for a deduction, in a nutshell, the office must, be:
- In a separate room or area of your house
- Your principal place of business
- Used regularly and exclusively for business
However, there have been cases won, especially since IRS issued new Rev Proc, allowing a businessowner to have a home office, even if s/he also does a great deal of the work elsewhere.
Do you have a business card? Does it show your home office address? Does it show your home office phone number (or cellphone)?
You are contracting with that store to teach their customers. The store is A place you do business. Not your primary place. Do you have a separate room (and with music, you must) where you teach your students, where you do your recordkeeping, etc.? If you do, most likely you can qualify for an office in home deduction.
Chapter 8 of IRS Publication 334 has more information for you about how the Office in Home Deduction works.
In fact, consider ordering Pub 334, read it, mark it up, etc. https://www.irs.gov/publications/p334/ Call IRS Forms line at 800-TAX FORM 800-829-3676. Or you can order it online at the IRS Website https://www.irs.gov/formspubs/page/0,,id=10768,00.html
And remember, you can find answers to all kinds of questions about office in home and other tax issues, free. Where? Where else? At www.TaxMama.com.
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