It’s almost tax time so why not get a jump on it and start organizing your numbers now. There are a number of issues you’ll want to consider. For instance, the home office deduction is one of the most misunderstood IRS rules. Here’s some of what the IRS says about this deduction:
Computing the Amount of Home Office Deduction
Generally, the amount of the deduction depends on the percentage of the home that is used for business. The deduction will be limited if gross income from the business is less than the total business expenses.
A taxpayer can use any reasonable method to compute business percentage, but the most common methods are to:
Divide the area of the home used for business by the total area of the home, or
Divide the number of rooms used for business by the total number of rooms in the home if all rooms in the home are about the same size.
To learn more about the home office deduction as well as other important issues and deductions read Your Video Business & Income Taxes.