Taxes Made Simple

Keith (graphic designer) asks:

I made sure this year that I would qualify for the home office deduction.  (Since I work out of my home everyday, it wasn't that hard.)  Can you help to explain exactly what I'm allowed to deduct though?

Answer:

First, you can deduct any expenses directly related to maintaining the part of your home used for business.  This includes things such as repairs or painting for your home office.

Next, you can deduct a percentage of the total costs of maintaining and running your entire home.  This percentage is figured by determining the square footage of your home office, and dividing it by the square footage of your entire home.  [Note: If the rooms in your home are all roughly the same size, the IRS will allow you to simply divide the number of rooms you use for your business by the total number of rooms in your home.]

Expenses of which you can deduct the business related portion can include things such as home repairs, home depreciation, rent (if you rent your home), cleaning products/sevices, home owner's insurance, etc.

By the way, you  might want to take a look at this tutorial for filling out a Form 8829.

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