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October 2000 GENERAL HOME-OFFICE
DEDUCTION OPPORTUNITIES You won't get any home-office-type deductions unless you regularly and exclusively use a room or specific area in your home or apartment for business. So, for example, you don't get deductions if you work out of a room that your family also uses as a den. In addition, generally the office must either be the principal place of your business, or a place where you meet or deal with clients or customers. If you're a professional such as a doctor, dentist, or consultant who regularly meets with clients or patients in the home, you probably qualify for home-office deductions, but you may benefit from help on how best to allocate "shared" personal/ business expenses. If you don't meet with clients in your home office, qualifying for home office deductions usually still is no problem if your home is your only business location. However, the rules are more complicated if some aspects of your business are performed in the home, and others are performed outside the home. In this situation, there is a question as to whether or not the office is your principal place of business. Often, there is a fine line between qualifying and not qualifying. And the rules seem to change often. For example, starting in 1999, the home office deduction has been allowed for those whose home office is the only place in which substantial administrative or management activities take place. If you're an employee who regularly comes home from the office with a loaded briefcase, catching up on paperwork at home won't do you any tax good. Employees qualify for home-office deductions only if they work at home for the convenience of their employer. So there are no deductions if you decide on your own to do office work during evenings and weekends, or work a couple of days a week at home because you'll get more done. And even if your employer requires you to work at home, you don't get any extra deductions unless you also get by the home-office hurdles. As you can see, working at home is anything but simple from the tax standpoint. We'll be happy to supply complete details on how the rules work in your situation, and how to make the most of them. If you need any help, don't hesitate to call. You should also call us if you're thinking of selling your combined home/office. With some advance tax planning, you may be able to minimize taxes on the transaction. Please call us if you would like to discuss the details of your particular circumstances.
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