S Corp and Office in Home

Today Heather from Portland, Oregon asks, “Can I report income from S Corporation on Schedule C? If not, how do I get the home office, depreciation, etc. deduction as I cannot find these in the 1120S form?”

Well Heather,

The whole point of setting up the S-Corporation is to run all your business expenses through the

The LAST thing you want to do is to put your S-Corp income on Schedule C because it turns your profits into self-employment income.

a) When you have profits on Schedule C IRS looks for the SE tax calculation.

b) When you don’t put the S-Corp income on Schedule E, IRS will send you a notice asking about unreported income.

How do you handle reporting your office in home expenses? IN the S-Corp.

What you should be doing is to have the corporation pay all the business-related home office expenses. If the corporation pays you fair market rent for the use of your home, you can deduct the expense from the corporation’s profits. Of course, you’ll have to report the rental income on page 1 of the Schedule E. That’s where you will deduct the depreciation, a percentage of the mortgage, homeowners insurance, repairs & maintenance and other home-related expenses.

If you’re running a business, and are incorporated, do hire a tax professional. We don’t get paid just to fill out the form. We spend years learning to deal with all these issues.
The few bucks you spend will save you a ton later on.

Lots of information in Small Business Taxes Made Easy – Chapter 8 office in home

You’ll find links to all kinds of business tax questions, forms and more at TaxMama.com

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