The home office deduction is often overlooked by small business owners and entrepreneurs. If you conduct any administrative, managerial, or clerical work for your business from home, you likely qualify to write off a portion of home office expenses.
For sole proprietors and single member LLCs, you deduct a percentage of home expenses like rent/mortgage, utilities, insurance, and depreciation based on the square footage of the office space vs. total home.
If a corporation or partnership, create an accountable plan to reimburse yourself for office use. Take distributions to cover the expenses. The company gets a deduction for the rent payment, the owner gets a reduction in taxable income.
To qualify, outline in partnership agreements that home office expenses are not reimbursable. Be sure to capture this deduction if you work from home, it provides significant tax savings.
