Home Office Deduction
Field of Study:
Each year the U.S. Census Bureau publishes what it refers to as non-employer statistics that may provide information about the increased importance of the business use of taxpayers’ homes. A “non-employer,” for purposes of the statistics, is defined as a business that has no paid employees, has annual business receipts of at least $1,000 and is subject to federal income taxes. These non-employers may be organized as corporations, partnerships or sole proprietorships. Because they have no paid employees, non-employers are more likely than others to operate their businesses from their homes and seek a home office tax deduction.
The data supplied on non-employers show a generally increasing number of these businesses, from a total of 19.5 million in 2004 to 25.7 million in 2017. Although they have no paid employees, they account for significant receipts. In 2004 they produced receipts of $887 billion; by 2016, those receipts had grown to $1.2 trillion . Clearly, the likelihood that any tax return preparer will be required to prepare a taxpayer’s tax return with a home office deduction is significant and is becoming more likely each year.
This course will examine the federal income tax deduction for business use of a home and will discuss: Qualifying for a home office tax deduction; Determining a taxpayer’s home office deduction using the actual expense and simplified methods; The special home-office deduction rules that apply to daycare facilities; The taxpayer’s home-office deduction recordkeeping requirements; and Where to take the deduction and the forms a tax preparer must use in connection with it.
After completing this course you will be able to:
- Recognize the general requirement for exclusive use applicable to home-office deduction and the exceptions to the requirement;
- List the requirements that apply to a taxpayer’s qualifying for a home-office deduction for purposes of storage of product samples or inventory;
- Identify the conditions a taxpayer must meet in order to qualify for the exception to the exclusive use rule when operating a daycare facility;
- Recognize the factors that must be considered to determine if a taxpayer’s home is the principal place of business for purposes of the home-office deduction; and
- List the exceptions to the requirement that a home office must be the taxpayer’s principal place of business in order to qualify for a home-office deduction.
- Distinguish between the actual expense method and simplified method of figuring the home-office deduction;
- List the expenses normally deductible by taxpayers using a home for business purposes who use the actual expense method;
- Recognize the limits applicable to a home-office deduction; and
- Calculate the home-office deduction for daycare facilities
- Identify where expenses of a home office are deducted; and
- Recognize the recordkeeping requirements applicable to taxpayers taking a home-office deduction.
General understanding of federal income taxation.
Type of delivery method:
Recommended CPE credits:
Final examination expiration date:
The program participant will have one year from the date of purchase to complete the course and final examination.
Web CPE is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org