Tax Facts

Information to help individuals and small business navigate our complex Tax Laws. Not to be construed as tax advice. Contact your hired tax advisor for your specific tax situation and advice.

Home Office Measurement Methods

In today's economy and with today's technology it is becoming more common that people work as independent contractors, statutory employees or simply have side jobs in the evening that provide extra income. For each of these scenarios, a person might use part of their home as their place of business.

One of the first things you'll have to do when meeting the requirements for and intending to take a home office deduction on your tax return, is to estimate the amount of space in your home you're using for business. There are two ways you can do this:

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Are Traveling Expenses Tax Deductible?

In general, a taxpayer may deduct ordinary and necessary traveling expenses incurred while away from home in the conduct of a trade or business. Internal Revenue Code Section 162(a)(2) and Treasury Regulation Section 1.162-2 allow for a deduction when individuals are away from home if it is reasonable for them to need to sleep or rest while their duties require them to be away from the general area of their tax home for a period substantially longer than an ordinary workday.

It doesn't always have to be that you are away for more than 24 hours. In some cases, travel expenses may be deductible even though you are away for part of the day. So, for example, a pilot that flies a charter trip and needs to rest because of duty time limits.

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Home Office Deduction by Employees

Let's say you're an employee of a business and you use your home office exclusively for business work that you do at home. Can you take a home office deduction? The answer is yes, but to qualify, you must not only meet the exclusive use requirement but your use of this office must also be for the convenience of the employer (and not just your own).

Generally speaking, your home office expenses are subject to the 2% floor of your adjusted gross income. And it only applies to those taxpayers who itemize their deductions. There is an exception to this rule, only if your are classified as a statutory employee. This is not a common status for employees; but if it applies to you, the deduction is not subject to these limits.

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