Business use of home

[curiousgeorge]

Hello,

Please note, this is basically the same query as earlier one, but I am re-posting as an edited version.

How do I claim a deduction for expenses on business use of home?

2 types of income in 2015.  1099-Misc for self employment  first half of 2015.  And W2 income as an employee the second half of the year.

Does below approach make sense?
For the 1099-Misc income from self-employment, I plan to claim the home use expense deduction,with the simplified method, on Schedule C.
For the W2 income as an employee, I plan to claim the home use expense deduction as
Misc business expense on Schedule A.

Thanks much for your kind assistance.

[TheOtherMe]

That is the way I would suggest you claim Office in the Home.  When you were receiving income 1099s, the correct place for income and expenses is Schedule C.

I don't know if this would fit your circumstance, but there is now a Simplified Method for claiming office in the home.

Link to IRS publication

www.irs.gov/publications/p587/ar02.html

Please be sure your office space is exclusively used as an office.  When I was an IRS Agent, I can't tell you the number of Office in the Homes I disallowed because they were not used exclusively as an office.

[curiousgeorge]

Thanks so much OtherMe,



Yes, the simplified method works.



Just curious, how did you disallow home office use?  Was a description of actual home office provided?

By the way - does home office have to be a room? Can it not be just a work space in a room, and space is used exclusively for work as with desk, drawers, computer, filing cabinet in the work space.
 

Thanks again! 


ps. May I add that I have always loved your closing lines.

[TheOtherMe]

My signature is the lyrics from my favorite song. 

I would disallow office in the home for not being exclusive use because I was doing audits in the home.  I would request to work in the office and there would be all kinds of things in the office that were not related to an office.   That was back in the day before computers.  Some didn't even have a desk set up.   I was auditing farmers and being told to use the kitchen table or dining room table as that was the "office".  That is not exclusive use and there went the office in the home deduction.  Being at the place of business was really pushed back then.  I have no idea if it still is since I am retired and was auditing large corporations and casinos when I retired.  No more kitchen table audits.

The New York Times article gives some idea of the issues I dealt with way back when. 

From a New York Times article dated March 20, 1975  www.nytimes.com/1975/03/20/archives/personal-finance-using-home-as-office-space.html?_r=0

Among the situations watched carefully by the Internal Revenue Service—which is looking at home office deductions more closely than ever—are those in which the room used as an office is also utilized for a den or other non‐business purpose. In such a case; only the amount of space not used for personal purposes can be made the basis for a deduction.

In addition, the deduction is limited to the proportion of time that the area is used as an office. For those who have full‐time jobs elsewhere and use the room to do work at home or for free‐lance projects, the amount deductible is sometimes challenged by the I.R.S., which prefers to take as a base the 24‐hour day rather than the number of hours that the space is occupied.

www.cpa-connecticut.com/home-office.html  This is current

A home office tax deduction can save a taxpayer thousands of dollars in taxes. If you are self-employed or an employee who works at home, you may be eligible for this significant tax deduction. In order to claim this tax deduction, you must meet the following tests:

Part of your home must be used in a business.
Its use must be regular.
Incidental or occasional use is not regular.
Its use must be exclusively for business.
It cannot be used both for business and for personal purposes.
The area must be a separately definable area.
It need not be a separate room.
The home must be the principal place of business for your business.
It must be used exclusively and regularly for administrative or management activities of your business.
There is no other fixed location where substantial administrative or management activities of your business are conducted.

[curiousgeorge]

Hello OtherMe,
Thanks so much for your kind help!
Beautiful, comforting words! What's the song title?

First half of year, self-employment income (SE); the rest of the year, full-time employee worked from home .  The simplified method applies to both incomes. Would below work?
Use Schedule C for SE; for employee income, also simplified method and claim home office use expenses as Misc job expense in Schedule A. 
 
Thanks again! 

[TheOtherMe]

The song was written by Paul McCartney when he was in the Beatles.  It is called Let It Be.

What you state above is how you should report office in the home in this situation.

[curiousgeorge]

Thanks so much again OtherMe!!! 

Have a nice new day/week/month!