So I am in a somewhat unique situation (I think... maybe not) and was hoping to brainstorm together with you guys. In addition to my employed W2 work, I now have a home office (this is new this year), where I actually have a legit separate office that is attached to my own home, where I will be seeing some patients, in addition to doing other work related to independent consulting. It is truly legit, in a sense of having a separate entrance, a waiting room, a bathroom etc (so not your "typical" home office for paperwork). My malpractice carrier is aware, so in that sense I am all good. I am just naive as to how to best organize this situation for maximize tax deductions (in our old home I had an office for paperwork but never used that deduction).
The question is what is the best way to organize office/business related deductions for taxes. The way I see it, I have three options: 1) deduct all home-related expenses based on %/ratio of office square footage (amounts to around 12% I think) 2) use the newly available "simplified option" (300 sq ft max x $5) - likely won't give me a very high yield OR 3) have my "business"/PLLC rent the office from me as an individual, then not be able to deduct anything and I will also have to pay individual taxes on that income.
When I first discussed it with my accountant (we haven't finalized the plans), he suggested option #3 as he thought it was just be most hassle-free, but I am doubting whether this is best and just feels sort of like an odd thing to do. I am leaning toward option #1. Any thoughts? Other options? Things I am missing or need to consider?
Also what I find somewhat confusing is this: if I do option #1, and then say need to do some construction/improvements on the office per se, do I pay that out of business expenses, or do I now have to pay out of personal and just deduct the %?
Thanks!
The question is what is the best way to organize office/business related deductions for taxes. The way I see it, I have three options: 1) deduct all home-related expenses based on %/ratio of office square footage (amounts to around 12% I think) 2) use the newly available "simplified option" (300 sq ft max x $5) - likely won't give me a very high yield OR 3) have my "business"/PLLC rent the office from me as an individual, then not be able to deduct anything and I will also have to pay individual taxes on that income.
When I first discussed it with my accountant (we haven't finalized the plans), he suggested option #3 as he thought it was just be most hassle-free, but I am doubting whether this is best and just feels sort of like an odd thing to do. I am leaning toward option #1. Any thoughts? Other options? Things I am missing or need to consider?
Also what I find somewhat confusing is this: if I do option #1, and then say need to do some construction/improvements on the office per se, do I pay that out of business expenses, or do I now have to pay out of personal and just deduct the %?
Thanks!
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