If you operate a business out of your residence, the home office deduction can reduce your tax bill by allowing you to deduct the expense of maintaining that space. As beneficial as this deduction may be, the rules for claiming this deduction are complicated, resulting in many taxpayers to make mistakes that could result in significant overpayments or, even worse, an IRS audit. Below are a few of the most common tax preparation mistakes when it comes to this potentially valuable deduction.

Home Office & Tax Preparation Mistakes to Avoid

1. Ignoring It

Some tax preparation websites encourage people to forego the home office deduction, based on the assumption that claiming it makes you more vulnerable to an audit. While the rules are complex and require recordkeeping, ignoring a deduction for which you’re qualified means paying more taxes than necessary.

2. Claiming an Unqualified Space

To qualify for the home office deduction, the space where you work must be used regularly and not for any other purpose. While it doesn’t have to be the only place you engage in business activities, your home office should be your primary work location.

3. Working for Your Employer

Beginning in 2018, the home office deduction is only available to self employed individuals.  It is not available to employees, even if their employer doesn’t provide a commercial location from which to work.  If you operate your own business, keep a space exclusively dedicated to that purpose.

The experienced accountants at Lee & Smith, PLLC have served the Texarkana area for almost 30 years, providing a wide range of accounting and tax preparation services. With their understanding of the Internal Revenue code, they will walk you through the intricacies of tax law, ensuring you get every deduction for which you qualify and avoiding common mistakes along the way. For full disclosure and information on home office deductions, contact them by calling (903) 832-4339 or by visiting their website. Follow their Facebook for more tax preparation tips.