Home Office Revisited

July 7th, 2023 at 3:07 PM

As an owner of a corporation and an employee within that corporation, you may be eligible for a home-office deduction if:

It’s important to note that your home-office deduction opportunity changed with the Tax Cuts and Jobs Act, which discontinued employee business expenses as itemized deductions from 2018 to 2025. But your corporation can claim the deduction by reimbursing you for your home-office expenses.

Although not new, it’s also important to know that if you rent part of your residence to your employer corporation and use this rented space when working for the employer, you cannot deduct these home-office expenses.

You want your home office to qualify as a principal office, even when you have an office downtown. For this to happen, you need to

If your corporation doesn’t maintain an office outside your home office, it is clear that your home office is for the convenience of your employer corporation.

But when you have a downtown office, your use of the office in your home must be for the convenience of the corporation. Various reasons might justify using a home office, including preserving confidentiality, ensuring uninterrupted attention to business planning, or accommodating records, invoices, receipts, etc.

Additionally, the corporation should write you a letter mandating that you conduct your administrative or management tasks at home for the corporation’s convenience. This letter, written on corporate letterhead, should be kept in your corporate tax file.

If your home office qualifies as a principal office, there are numerous benefits, such as:

Mark S. Fineberg, CPA

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