With the dawn of the digital age, home offices have become more and more popular. In fact, more and more people are seeking the flexibility of working from home, and the opportunities to take advantage of the tax benefits that come with hiring an employee or freelancer in their own home. Those living in Dallas – or any other city across the United States – are no different. But tax deductions for home offices are complex and require careful consideration before filing. With that in mind, here are the top five things to consider when claiming a home office deduction in Dallas.

First, recognize that under the Tax Cuts and Jobs Act (TCJA), the home office deduction is only for self-employed individuals or businesses. Though it can be advantageous, only eligible taxpayers may take the deduction. Additionally, the home office must be regularly used for business-related activities. It cannot be treated as a personal space by the taxpayer or other members of the family.

Second, determine whether qualifying expenses are able to be deducted. Deductible expenses include utilities, office supplies, phone costs, internet service, equipment, repairs, and other items necessary for the home office to operate. It is important to remember that only those expenses that are "ordinarily and necessarily incurred" are deductible.

Third, be mindful of the specific conditions of the home office deduction. Under the TCJA, taxpayers may be limited in the amount of expenses they can claim. For instance, taxpayers may only claim deductions on the expenses that relate to the portion of the home used for business. The portion must be designated for its use as an office and not used for another purpose. This means the office must be separated from the rest of the home – like a dedicated space or a separate room.

Fourth, identify the necessary documents and records for filing for the deduction. All documents related to business income and home office deductions must be kept for three years. To ensure the deduction is allowable and to be prepared in the event of questioning by the IRS, maintain records of all related expenses and activities as well as invoices and receipts.

Finally, consider consulting an expert. Home office deductions can be confusing even for those experienced in tax law. Those that are interested in the deduction should full research the rule and regulations or contact a knowledgeable business lawyer or accountant to ensure they are filing compliantly. This will top off any deduction or filing with greater security and protection.

Claiming home office deductions is a complex task that requires thorough research. As with all deductions, the best advice is to seek the counsel of someone with expertise in tax law. With the help of a business lawyer or accountant, people living in Dallas – and across the United States – can accurately and compliantly claim this deduction for their home offices.


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