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Old 04-11-2013, 02:12 PM
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Home office deduction for software devloper

Hi Tax Gurus!
Can you advise me on whether my situation qualifies for a home office deduction?

1. I am a software developer working for a telecom company.
2. One room in my townhouse is dedicated to a home office.
3. I use the home office quite regularly (about 8 hrs a week) for normal office work, simply because of heavy workload. Other instances when I use my home office are
- for resolving critical issues that need immediate attention (eg on weekends)
- for working with remotely located teams (UK, India, China) outside of normal office hours.
4. I don't use the home office to meet with customers or clients because that is not a part of my job description. I do call into internal meetings regularly, if the meeting is scheduled according to UK or Asian timezones.

My wife has a similar job profile and she also uses the home office often. Does this have an impact on the home office deduction?

I understand this is an "audit sensitive" deduction, so any help is greatly appreciated!

Thanks,
Mahesh



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Old 04-12-2013, 03:32 AM
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Join Date: Oct 2010
Posts: 5,233
“1. I am a software developer working for a telecom company.
2. One room in my townhouse is dedicated to a home office.
3. I use the home office quite regularly (about 8 hrs a week) for normal office work, simply because of heavy workload. Other instances when I use my home office are
- for resolving critical issues that need immediate attention (eg on weekends)
- for working with remotely located teams (UK, India, China) outside of normal office hours.
4. I don't use the home office to meet with customers or clients because that is not a part of my job description. I do call into internal meetings regularly, if the meeting is scheduled according to UK or Asian timezones.”===========>I guess NOT all EEs are able to write off their home-office expenses. There are four tests that you must pass before you can deduct your home-office expenses. 1)The space should be used only for business;the workspace is used exclusively and regularly for business. Put simply, if the workspace is used for both business and personal use, it is not deductible. Furthermore, the space must be used on a regular basis for business purposes; a space that is used only a few times per year will not be considered a home office by the IRS, even if the space is used exclusively for business purposes. These criteria will effectively disqualify many filers who try to claim this deduction but are unable to prove regular and exclusive home office use.2) Whether your home office is solely for your convenience or the convenience of your ER. If yourER has provided a place for you to do business at its own location, then you cannot simply set up a home office for your own convenience and deduct its expenses. Your ER has to mandate that you must work from home before your expenses become deductible. There cannot be an alternative location available. Both EEs and independent contractors may have to prove this to the IRS via expense receipts and documentation from their employers stating that there is no workplace provided to them outside their homes.3) Filers who have more than one home-based business must be careful when claiming the home-office deduction. If any of your different lines of business don't meet the above criteria, then no home office deduction can be taken for any of them. It's an all-or-nothing proposition; the home office expenses incurred for each separate line of business must meet the above criteria on a standalone basis, and if one line fails, then all others fail as well.4) "income" test; you must make sure that the total deductible expenses don\'t exceed the income derived from the business for which the deductions have been taken. For example, if total deductions come to $1,200, yet you only earned $950 of income from the business, then only $950 of deductions can be taken for that year. However, the remainder can be carried forward to a future year and deducted when business income exceeds expenses.

“My wife has a similar job profile and she also uses the home office often. Does this have an impact on the home office deduction?”===========>Then, you need to allocate all expenses incurred between yur biz and your spouse’s



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