Doubted the home office deduction for years, finally tried it and saved $1,200

I always thought the home office deduction was a red flag for an audit, so I avoided it for like 5 years. Then my accountant buddy in Portland showed me how the simplified option works, no crazy calculations. I claimed $5 per square foot of my spare room I use for invoicing and calls, came out to $1,200 last year. Has anyone else been scared of certain deductions that turned out to be totally fine?

3 comments

3 Comments

anthony_jackson314d ago

Wait, $5 per square foot? That's it? I've been leaving that kind of money on the table because I thought I needed a whole separate entrance and a sign on the door.

hannahj494d ago

I get why they'd say that, but $5 a foot feels low for any real commercial space once you factor in utilities and wear and tear. A separate entrance and a sign are usually worth the extra money to keep clients from wandering through your living room.

matthewking3d ago

Tbh @anthony_jackson31 is exactly right, the separate entrance thing is a total myth for a lot of us. The IRS just wants the space to be used regularly and exclusively for work, not that it has to look like an office with a door sign. I was scared of this for years too because friends kept saying it was an audit magnet. But the simplified option is so straightforward, no receipts or square footage math nightmares. Only thing you really gotta watch is that the space doesn't double as your kid's playroom or something. Honestly it's wild how much money people leave on the table just from hearing rumors.