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Deducting Home Office Expenses

Shameless plug: TypeWell is co-hosting a webinar with a Certified Public Accountant from Independent Contractor Tax Advisors on Wednesday, April 22, 2015, Tax Strategies for Independent Contractors (free webinar)


Tax deadlines are upon us! A couple of days ago, I wrote about deducting job-related educational expenses. While we are on the subject of deductible expenses for transcribers, here is one that applies primarily to those of us working remotely from our homes.

We can deduct a portion of our rent or our mortgage payment, provided we have a room in our home or apartment specifically dedicated to our jobs.

And wouldn’t you know it? The IRS has a publication devoted to this topic as well. You can find it here: www.irs.gov/pub/irs-pdf/p587.pdf.

Recently the IRS has unveiled a simplified method of taking these deductions, so there are now two ways to make this calculation. The new method allows us to multiply a prescribed rate by the allowable square footage of the home office. The old method, which is still available, requires us to determine the actual expenses of the home office. It’s more cumbersome and time-consuming, but you may find it still works out in your favor.

Woman Working In Home Office

The room you call your home office must be used regularly and exclusively for business.

Whichever method you and your tax professional agree on, the requirements are the same: the room you call your home office 1) must be used regularly and exclusively for business (not a "multi use" room) and 2) must be your principal place of business. In my case, I have a spare bedroom in which I transcribe online, and this room also contains other things I need for my job such as a second computer for correspondence and various language reference books. It also contains our Internet modem, router and hub.

Disclaimer: We're not tax experts! Please consult with a tax professional when you are preparing your tax return. 

photo credit: K e v i n via photopin cc

Ken_about_us

Ken Deutsch

Ken Deutsch lives in sunny Sarasota and has been a TypeWell transcriber since 2007.

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