Home Office Deduction

[volente_00]

Quote from silver914:

I am an Enrolled Agent with H&R Block. Filing an 8829 is no more audit fodder than a schedule C. How you fill it out is.

The only amount you have to recapture upon the sale of the home is the depreciation, which should be small in comparison to your other deductible home office expenses. Besides your real estate taxes and home mortgage interest, which may be deductible if you itemize, you can also deduct utilities, insurance, repairs and maintenance, operating expenses, rent, and many other unforeseen expenses.

Can you deduct your utilities any other way? Rent? Home owner's insurance? Repairs, maintenance, or "cleaning"? How else are you going to deduct the $500 in electricity those six monitors eat up in a year?

Fuck, what do I know compared to all the other experts around here?

Yes but you only get to deduct the % of you home office out of total square feet. So you are looking at 5 to 8% of those total expenses x your effective tax rate ?


Say those expenses are 15k for me and my home office is 5% of my house size.


Then my home office deduction is only $750 ?


Or is my math wrong ?







I'm no tax expert but my lawyer spent 20 years working for the man before he opened his private practice. He specializes in audit defense.


Till this day he says


home office deduction is a red flag because it is easy for them to deny. The burden of proof is on you. If you claim it you better have records and pictures.

Call me crazy but I put my faith in him over any anonymous assclown posting on the internet.

 

[nutmeg]

Say those expenses are 15k for me and my home office is 5% of my house size.


Then my home office deduction is only $750 ?


------------------------------

Then if your tax rate is 20% you'll save $150 or $10 a month give or take or 30 cents a day, it'd would be much easier and tax free money to just snag 30 cents out of the "need a penny, take a penny" tray at the 7-11 everyday.

 

[silver914]

Quote from volente_00:

Yes but you only get to deduct the % of you home office out of total square feet. So you are looking at 5 to 8% of those total expenses x your effective tax rate ?

There are direct expenses and indirect expenses on the 8829. Your deduction is not limited to the percentage of the home dedicated as a home office. You can deduct 100% of the direct expenses.

Say those expenses are 15k for me and my home office is 5% of my house size.


Then my home office deduction is only $750 ?


Or is my math wrong ?

No, your math is not wrong, but I think $15k is too low to bother with. I see a lot of mortgage interest that exceeds $15k. I see utilities of $5k and real estate taxes are all over the place. Commonly the average person taking the home office deduction takes a total of around $5k or $6k. If yours would only amount to $750 you would probably be better off listening to your lawyer.

I'm no tax expert but my lawyer spent 20 years working for the man before he opened his private practice. He specializes in audit defense.


Till this day he says


home office deduction is a red flag because it is easy for them to deny. The burden of proof is on you. If you claim it you better have records and pictures.

Call me crazy but I put my faith in him over any anonymous assclown posting on the internet.

Yep, I'm just an anonymous assclown(sic). So, why are you here again?

 

[Picorian]

I am a CPA, and have been deducting the home office for years (no audit). My stance is if you are entitled to it, may as well file for the deduction(s) as long as you are not bullshting. Every dollar counts!

 

[Bob111]

Quote from Picorian:

I am a CPA, and have been deducting the home office for years (no audit). My stance is if you are entitled to it, may as well file for the deduction(s) as long as you are not bullshting. Every dollar counts!

this bring us back to nutmeg's math. was it worth it? cause $500 a year for electricity for 6 monitors sounds like BS to me. and nutmeg's numbers are pretty close to what i come up with..i guess my math is wrong too..

No, your math is not wrong, but I think $15k is too low to bother with. I see a lot of mortgage interest that exceeds $15k. I see utilities of $5k and real estate taxes are all over the place. Commonly the average person taking the home office deduction takes a total of around $5k or $6k. If yours would only amount to $750 you would probably be better off listening to your lawyer.

the initial Op's question is about place that you rent. not own. not sure where 15K in interest is coming from...but even if you own the place..
i guess we are talking about trading room painted with gold and like i said above-6 x60" plasmas running 24/7..anyway-good luck to you on your 6K deductions. i cant' come up with such numbers and yes..i have more than 6 monitors and >5 PC 's in the house(most of them dedicated to trading only). i guess i'm too honest with IRS

 

[silver914]

Quote from Bob111:

this bring us back to nutmeg's math. was it worth it? cause $500 a year for electricity for 6 monitors sounds like BS to me. and nutmeg's numbers are pretty close to what i come up with..i guess my math is wrong too..

Nutmeg's math was wrong, volente 00's was correct.

i guess we are talking about trading room painted with gold and like i said above-6 x60" plasmas running 24/7..anyway-good luck to you on your 6K deductions. i cant' come up with such numbers and yes..i have more than 6 monitors and >5 PC 's in the house(most of them dedicated to trading only). i guess i'm too honest with IRS

Look, you can call me a bullshitter all you want. I don't fucking care. If you are too ignorant to understand that there are people legitimately deducting $5k to $6k in utilities for their home office then you indeed have blinders on. Open your mind. Utilities involves more than electricity. One can also have a dedicated meter just for their home office. I'm just sayin'...

What do you want? For an attorney to hold your hand while he shows you how to set up your home office? Is $500/year in electricity an exaggeration for you? Jesus H. Christ are you for real?

Forget about it...you know what? Fuck it all. You are absolutely right. I am full of shit. Don't listen to a God damned thing I say because I made it all up...every fucking word...it's all lies and you are one hundred percent correct. The 8829 is a red flag for the IRS, a schedule C is a red flag for the IRS, 8829 isn't worth the time, effort, or money and I'm just some ass clown behind a computer and I don't know shit about taxes...hell I'm just a fifth grader typing away on my iPod. Happy now?

Fuckin' people.

 

[nutmeg]

Quote from silver914:

[Forget about it...you know what? Fuck it all. You are absolutely right. I am full of shit. Don't listen to a God damned thing I say because I made it all up...every fucking word...it's all lies and you are one hundred percent correct. The 8829 is a red flag for the IRS, a schedule C is a red flag for the IRS, 8829 isn't worth the time, effort, or money and I'm just some ass clown behind a computer and I don't know shit about taxes...hell I'm just a fifth grader typing away on my iPod. Happy now?

Fuckin' people. [/B]

Jeepers, you would be a fun guy at an IRS audit.

 

[volente_00]

Quote from silver914:






Look, you can call me a bullshitter all you want. I don't fucking care. If you are too ignorant to understand that there are people legitimately deducting $5k to $6k in utilities for their home office then you indeed have blinders on.

LOL, who the hell is trying to claim 5 to 6 k in utility expense for just the home office ?


IRS will be on that red flag like flies on $hit.


More like 5 or 6 k utility expense for the whole house, leaving you to write off about 5 % of that for your home office area which may lower you tax liability by a whopping $100 per year. Then you get stuck paying more capital gains tax on the depreciation which makes it even less beneficial to claim something that raises your audit chance.


Hell let's go crazy and say you have 60k worth of annual expenses x 5% area that makes up your home office.


That leaves you $3000 in write off x highest tax bracket so that may save you $1050 in tax liability. Now subtract the additional capital gains you will have to pay if you ever sell.



Is it worth paying a lawyer $200 an hour to defend you against the man for so little savings?

 

[GTS]

Quote from silver914:

Forget about it...you know what? Fuck it all. You are absolutely right. I am full of shit. Don't listen to a God damned thing I say because I made it all up...every fucking word...it's all lies and you are one hundred percent correct. The 8829 is a red flag for the IRS, a schedule C is a red flag for the IRS, 8829 isn't worth the time, effort, or money and I'm just some ass clown behind a computer and I don't know shit about taxes...hell I'm just a fifth grader typing away on my iPod. Happy now?

Fuckin' people.

You mad bro?

 

[Free Thinker]

if you are trying to prove to the irs that you qualify as a professional trader one of the things they would expect is that you would have an office.