If you have a home-based business you can save money by availing home office tax deductions. The IRS allows you to save money on insurance, mortgage, repairs, and other utilities if you have an office at home. Home office deductions are applicable for all kinds of homes irrespective of apartments, flats, and even mobile homes. So if you are wondering how to claim a home deduction this article will provide you with all the basic information.
Requirements for home deductions
The internal revenue service or the IRS has created certain specific requirements that must be met with to claim home office deductions. They are as follows:
Rules for employees
The IRS has specified a couple of other rules for employees claiming home office deductions. So if you are an employee in addition to the above-stated rules you would also have to comply with these other criteria.
What can you save
Filing for a home office tax deductions can reduce your tax bills considerably. If you meet all the required compliance criterion you can easily save a lot by home tax deductions. The IRS will deduct mortgage insurance, rent, repair, real estate taxes, depreciation and any other type of utilities.
However, your deductible amount will depend on the percentage of the house you are using for your work.
Also if your income is lesser than the expenditure incurred for your business your deductions will be constrained.
How to file your claim
If you are thinking of claiming your home office deductions and you are meeting all the compliance criterion you can easily reduce a considerable portion of your tax bills. Here is how you can claim your home office deductions.
Self-employed: For those who are self-employed and using their homes as the office they have to fill Form 8829 to understand the amount of deduction they will be eligible for. Then this amount has to be stated in Schedule C.
Employees: Employees have a different procedure for filing home office deductions. If you are an employee you can calculate your deductible amount using the worksheets of IRS publication 587. Once you have calculated your deductions you can then claim them as itemized deductions on Schedule A.
These are the basic information that one needs to know and follow to file a home office tax deduction. Successfully filing your claim can easily reduce a considerable amount of tax burden from your shoulders.