There is a magical 100 square foot space in your home that, at a moment’s notice, transforms into whatever your heart desire; day room, exercise room, make-shift bedroom, storage room, and yes home office.
Versatile you say and the magic continues…
Its tax time and your home expense for the year as comprised below totals $22,000:
- Renter’s Insurance
- Lawn Care…etc.
Your magic room represents 10% of the total square footage of your home and you happily claim a home office deduction of $2,200 and, as with Cinderella on the stroke of midnight, the magic suddenly ends. The $2,200 deduction is disallowed. Ouch!
And it came to pass that you penitently approach Uncle and ask:
- Did we not have a desk, chair, and phone in the magic room?
- Did we not create business plans and fancy spreadsheets in the magic room?
- Did we not take calls and address client concerns in the magic room?
But Uncle responds:
- You did not regularly use your magic room for business purpose;
- You did not exclusively use your magic room for business purpose;
- You did not use your magic room as your principal place of business;
- If you are otherwise employed, business use of your magic room must be for the convenience of your employer and not for personal comfort.
And as you try to justify and defend your magical deduction Uncle declares:
“Depart from me deduction denied”
Call and let’s talk tax planning!