Within the next few months I will be working remotely (full time work from home) for my employer, as well as operating my small business on the side. Will I be able to deduct the home office expense if I operate both jobs out of the same office?====.Of course; Whether you are self-employed or an employee, if you use a portion of your home for business, you might be able to deduct the associated costs.
you CAN claim your home office expenses; the office must be your principal place of business and be for the convenience of your employer not just helpful in conducting your job. To deduct workplace expenses, your total itemized deductions must exceed the standard deduction. You must also meet what?s called "the 2% floor." That is, the total of the expenses you deduct must be greater than 2% of your AGI and you can deduct only the expenses over that amount.
So Unless you itemize your dfedcutions on SCh A of 1040, you can not claim the home expenses on your return.Also as a self employer, you may claim your home biz expenss; You must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example,say, if you have in-person meetings with clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers. Generally, deductions for a home office are based on the percentage of your home devoted to business use.your Self-employment income and home biz expenses are typically recorded on Sch C. The full amount of eligible expenses is used to offset the income; Sch C does not have a floor on AGI.So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities as an employee / a self employer.
as a self employer NOT as an emoployee, you may may claim expenses for travel between your home and other work locations if your residence is your principal place of business. Self-employed taxpayers need Form 8829 to figure the home office deduction. They then must report this amount on Sch C.
To clarify my reason for asking this question, I understand if I exclusively operated one, or the other, then the home office deduction would be applicable (I meet all other qualifications). But if I operate BOTH out of the SAME office, is it still deductible? Do I fail the "exclusivity" test? ====. As mentioned above; yes you can;as you said, your home office area must be used regularly and exclusively for your business needs. You can't set up a computer in your den, sporadically type invoices and claim that room as your home office. the area of your home can be a room or other separately identifiable space. But the space, says the IRS, does not need to be physically marked off from the rest of the room. Regardless of what specific space is your home office, you must use that room or area just for work.
Do I have to set up two different areas for each one?
====you may do this aslognas you want there is no any problem; however when you dispose of the home later, you must recapture the unrecaptured sec 1250 deprecaiiton that you took in previous years as ordinary income taxed at 25% ASLONGAS YOU EARN GAIN ON THE SALE OF THE HOME. BUT IF YOU TAKE LOSSES ON THE DALE FO THE HOME , THEN YOU DONOT NEED TO RECAPTURE THE UNRECAPTURED SEC 1250 deprecaiiton ON your return.