Loading…
7
Hot take: Deducting home office is actually hurting my tax returns since 2020
I used to claim the simplified home office deduction every year, about $5 per square foot for 300 feet. Then my accountant showed me how my actual expenses method got me $2,400 more last year since I track utility bills and internet separately. Am I missing something or has the simplified method always been a trap for people with higher overhead?
3 comments
Log in to join the discussion
Log In3 Comments
henry1502mo ago
Wait your accountant got you an extra $2,400? That's insane. The simplified method has always felt like a lazy shortcut to me but I had no idea the gap was that big.
7
jana5092mo ago
You said it perfectly, "running a real business from home it's basically leaving money on the table." I had the same wake-up call when my accountant showed me the numbers a few years back. It stings a little to realize you could have had that money all along, but I'm glad you're not missing out anymore.
2
quinnperry2mo ago
Totally agree with you @henry150, the gap can be huge if you have high utility bills or a dedicated office space that actually costs you money. I used the simplified method for years too because it was easy, but once I sat down and calculated my actual internet, electricity, and even repairs on my home office area, the difference was way bigger than I expected. The simplified method might work for someone with a tiny setup and low overhead, but if you're running a real business from home it's basically leaving money on the table. I always tell people to at least run the numbers both ways once to see what they're missing...
0