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HOME OFFICE DEDUCTION: IS THIS REALLY AN IRS AUDIT RED FLAG?

October 11, 2017

 

HOME OFFICE DEDUCTION: IS THIS REALLY AN IRS AUDIT RED FLAG?

 

If you use part of your home as a designated office space, the question is: Will claiming the deduction increase your chances of being audited?

 

Many articles are written on this subject and they all agree with each other that home office deductions are a red flag. None of them have any evidence backing that up.

 

The most common expenses you can allocate a portion of to your home office include:

 

1.  Mortgage Interest

 

2. Real Estate Taxes

 

3. Insurance

 

4. Repairs and Maintenance

 

5. Utilities

 

6. Depreciation

 

7. Rent

 

In the event that you do get audited, you can see from the list above that the majority of deductions are all backed up by clear documentation. Depreciation is a fixed number, and mortgage interest and real estate taxes can be found on your 1098. Insurance, utilities and rent also have a clear paper trail.

 

Congress wrote the tax law with provisions for claiming deductions for a home office. Then the IRS administered the tax law and created the forms for claiming deductions for a home office. Taxpayers have nothing to fear from obeying the law and claiming the legitimate documented deductions according to the law.

 

CONCLUSION:

 

There is no evidence that a home office deduction is a red flag for the IRS. The majority of your deductions will be backed up by clear documentation. A Home office deduction is an easy way to increase your tax savings. You should never shy away from a home office deduction that you can rightfully claim.

Copyright 2017 Tax Strategies, Inc. Robert Greene CPA CMA

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