Welcome Guest. Register Now!  

LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 05-20-2009, 12:53 PM
Junior Member
Join Date: May 2009
Posts: 1
Home Office Credit-Red Flag on late return?

I've been asked to file a friend’s tax returns for the years 2000-2003. All other tax year returns have been filed on time. He is self-employed and on all prior year returns he claimed the Home Office Credit and is eligible to take this credit on these years also.
Personal tragedy's occurred during these years and bottom line is he has "No Receipts" for any of his expenses! All records were in a storage unit that he lost.
Since his expenses are relatively similar each year I plan to report similar deductions on these returns. The Home Office credit is essential to his return each year to reduce his tax liability.
I'm concerned claiming this credit may raise a red flag and then also question the expenses that there are no receipts for.
If I don't take it he owes. Plus he'll owe all the penalties and interest, which is a lot. If I take it am I putting him at risk for losing all his business deductions? What happens when records are lost or destroyed?
I would appreciate any thoughts any of you might have on which road I should take.
Thanks so much,

Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 05-21-2009, 10:55 AM
TaxGuru's Avatar
Tax Guru
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,413
Blog Entries: 3
Well, in my opinion you are probably correct in being concerned about the Red Flag issue. But, clearly, you have a duty to your client/friend to deduct what may have been reasonable business expenses. If you think that the client has had a home office and you have confirmed the use is being used exclusively for business purposes, then go ahead and claim what the client believes are reasonable expenses.

The IRS will allow what it considers ordinary, necessary and reasonable expenses pertaining to the Home Office Expense. So, I would go ahead and deduct what seems reasonable and necessary expenses.

Good luck!

Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.

Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Treadmill for a home office MrJ71 Itemized Deductions 1 02-08-2009 11:32 PM
Can I avoid late filing penalties if my 2006 partnership tax return is filed late? Redden Limited Liability Company 0 09-29-2008 07:58 PM
Is it mandatory for me to depreciate my home that is used as a home office? Pancho Sole-Proprietorship 1 09-17-2008 12:38 PM
Home Office Deduction Samatg General 0 03-15-2007 08:01 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 » Income
 » IRA/Sep
 » Medical
 » Payroll
Forum for CPAs
Financial Planning