Many people ask me if they can take a “home office” deduction on their tax returns and here’s the answer.
If you are a sole proprietor or landlord, you can take a deduction for using a portion of your home against your business earnings on your tax returns. If you are an employee, sadly, you cannot take a deduction on your Federal tax return; however, California still allows this deduction as a Miscellaneous Itemized Deduction.
The deduction itself is a bit complex. The first part of the deduction is based on the “business use percentage” (office square footage compared to total dwelling square footage). That percentage is applied against the expenses, such as total rent, mortgage interest, real estate taxes, utilities, and insurance.
For a sole proprietor, this deduction saves you about $0.50 tax on every $1.00 of expense.
If you need my help please call me anytime! Anthony W. Imbimbo, CPA 619-497-1040