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Home Office Deduction... Repairs and Maintenance Deduction - what qualifies

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  • Home Office Deduction... Repairs and Maintenance Deduction - what qualifies

    I just started a single member S-corp this year due to sufficiently high income to make it worthwhile compared to sole proprietor. As such, I need to fill out a monthly "Expense Reimbursement Voucher" monthly and send to my accountant. I primarily work at the office but I do also use my home office for a variety of tasks when home (finishing notes from the day, communications, tax, etc...). The form provided is pretty straightforward (square footage of home, utilities, mortgage interest, etc...) but the only question is what items typically qualify for "repair and maintenance" section. Some examples:

    1-For inside the house projects, does a repair/maintenance only count if I do it to the office portion of the home (buying a desk or fixing the carpet/closet in that room) or is it anywhere in the house that may have some bearing (such as new washing machine where a portion of it is used to wash work clothes or purchasing a whole home generator).

    2-For outside the house projects do I include the entire portion or only a percentage in relation to office/total home sq footage. Examples include weekly lawn services, snow removal, new roof, new gutters, etc...

    Thank you.


  • #2
    1. R&M
      • Related only to your office are 100% deductible as HO deductions
      • For the house in general are deductible as pro-rata with other whole-house expenses, such as utilities
      • We have an online worksheet for clients to complete and it separates out the 100% from the pro-rata. Make sure to delineate for your CPA
    2. These are pro-rata expenses
    Bottom line, make sure your CPA knows what is “whole house” and what is “specific”. The form for reporting HO expenses has them laid out like this.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Minor point. "Work Clothes" are defined as being required by your employer that can/would not be used for everyday wear. I can't imagine a scenario where a physician's pro-rata laundry from "work clothes" is anything but dancing on the head of a pinhead.

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      • #4
        in general my understanding of home offices boils down to 2 simple statements

        1. many people WILDLY overestimate what can be deducted, often be orders of magnitude
        2. messing with HO deductions isn't worth it for 95% of people who think about it

        but, listen to jfox and spiritrider not me, i am a lowly part-time emergency physician

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        • #5
          Originally posted by MPMD View Post
          in general my understanding of home offices boils down to 2 simple statements

          1. many people WILDLY overestimate what can be deducted, often be orders of magnitude
          2. messing with HO deductions isn't worth it for 95% of people who think about it

          but, listen to jfox and spiritrider not me, i am a lowly part-time emergency physician
          I hear this a lot but think the law is actually pretty straightforward on it. Most home office deductions end up being between $2,000 and $6,000 (depending on a variety of factors like the ratio of the home the office occupies, how much mortgage interest, etc.)

          I don't think people should be concerned about a home office being more likely to get audited or that it's suspicious on its face.

          There's a court case involving an anesthesiologist who was denied a home office deduction and Congress actually changed the law later to allow for circumstances like that. It's Commissioner v. Soliman.

          That said, when I was an IRS auditor the taxpayer had claimed 50% of his apartment as a "home office" and I actually went to his apartment to check it out. I think I reduced the % after seeing the place.

          But I always claim home office expense when it's appropriate.

          The bigger benefit is being able to count more of your driving as a business expense (1099 contractors only, doesn't apply to W-2 work).

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          • #6
            Originally posted by MPMD View Post
            in general my understanding of home offices boils down to 2 simple statements

            1.
            2. messing with HO deductions isn't worth it for 95% of people who think about it
            If it’s qualified and the physician has an expensive home with a decent-sized exclusive-use HO, you might be surprised! (Or, knowing you, maybe not).
            Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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            • #7
              Seems like using the simplified method square footage x $5/ft up to 300 sq ft max might be the easiest approach and would make future home sale cleaner with no need to recapture depreciation.

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              • #8
                Originally posted by Bmac View Post
                Seems like using the simplified method square footage x $5/ft up to 300 sq ft max might be the easiest approach and would make future home sale cleaner with no need to recapture depreciation.
                Simpler, rarely recommend. Easy to calculate recap with tax software in the event of a future sale. Choosing simplified method is irrevocable, too. I think I’ve seen 1 or 2 at most instances in which simplified is better.
                Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                • #9
                  Originally posted by jfoxcpacfp View Post

                  If it’s qualified and the physician has an expensive home with a decent-sized exclusive-use HO, you might be surprised! (Or, knowing you, maybe not).
                  either way is possible

                  i feel like 99% of the time i hear about this it's someone who is 90% clinical trying to deduct part of their house and everything they buy.

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                  • #10
                    If I put my office down by the pool , can I deduct the Margaritas?

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