For many business owners in Chicago and throughout the United States, working from a home office has become increasingly popular due to convenience, cost savings, and flexible work hours. But like any important financial decision, it’s essential to consider all aspects of this significant undertaking before committing. Here are the top five things to consider if you’re interested in taking a Home Office Deduction on your taxes.

First, consider who will be using the home office. Generally, this should be limited to you and/or other members of your family who are employed by the same business. Additionally, if the office will be used exclusively for business purposes, you must have a clear separation between the business and family elements of your home; the office must be used solely for business activities.

Second, it’s crucial to note that the home office must be used regularly and exclusively for the entirety of the tax year. This means that the office cannot be used for personal purposes, such as family activities or hobbies. Additionally, it must be a legitimate, standalone business associated directly with your occupation.

Third, you must determine the square footage of the area in which you’ll be conducting business. This figure will determine the amount of deductible expenses that are applicable to your income statement. When calculating the square footage of the home office you’ll want to factor in windows, closets, hallways, and other furnishings and accessories.

Fourth, be certain to review the IRS guidelines regarding deductible expenses. These include costs associated with heating, cooling, electricity, rent, homeowners insurance, furniture and décor, and other expenses that are related to the business. Knowing which expenses you should deduct and which ones you must pay will be a determining factor in the future success and profitability of your business.

Finally, find a qualified tax professional who understands the complex regulations of Home Office Deduction and how they apply to Chicago businesses. It’s important to understand both state and federal rules in order to avoid any future legal conflicts or complications that could result from an inaccurate tax filing.

If you’re thinking of setting up a home office in Chicago, it’s essential to determine both your short-term and long-term goals before taking action. Considering the above-mentioned tips can help ensure that your home office is set up properly and that you’re properly using the Home Office Deduction to receive the highest tax deduction amount possible.

UpCounsel is the ideal source for finding a qualified business lawyer in Chicago who is knowledgeable and experienced in the laws pertaining to home office deductions. With UpCounsel, you can easily connect with an attorney, have your legal questions answered, and review reviews and ratings in order to confidently choose the best lawyer for your tax purposes.

Whether you’re starting a new business, expanding an existing one, or in need of legal advice, UpCounsel is the perfect place to find the help you need.

Topics:

Home Office Deduction,

Deductible Expenses,

IRS Guidelines