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Friday
Mar102017

Tax Tip: When to consider a home office deduction

iStock/ThinkstockIn the past, the home office deduction has been a red flag for IRS auditors.

If you're not sure if it applies to you, here's what you need to know:

"You want to be able to say one-fifth of my house is my office," says ABC News Chief Business and Economics Correspondent Rebecca Jarvis. "This is the section I want to define inside of my home as my work space."

And if you use that space legitimately, you can deduct part of your rent, your mortgage, "heat, water, all those things," she explains. "You can take a fraction of them as your deduction." The same goes for housekeeping and insurance.

Jarvis says the key is not to exaggerate.

"You aren't using your entire home as your office. But if you're using your kitchen for part of your office, if you're using a section of your house for part of your office, be reasonable. But, again, keep those receipts," she notes.

And make sure you really are using that part of your home you're claiming exclusively for business.

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