Archive for the ‘Office In Home’ Category

Good News. Bad News.

August 31, 2013

When buying furniture and equipment, the Internal Revenue Code Section 179 allows a business an option to write off the total cost in the year purchased. This is true whether or not you have made all the payments for the purchase.  So if you bought it on Good News Bad Newscredit you can still get the deduction. That is the good news. And that is the bad news.

The good news is that the deduction reduces your current year taxable income and possibly your tax.

The bad news is that you may need the deductions more in a future year.  And the deduction may be limited depending on your income.  And the rules have some twists and turns.  And, if you sell it, all the proceeds are taxable.

Don’t presume that it is best to take the deduction this year. Ask your Tax Professional.  More good news,  you now have enough information to ask some intelligent questions.

And, of course, you must keep good records.

Hint – Make a folder for each of your large purchases that have a warranty.  Put a copy of the receipt, warranty and instruction book in the folder.  A few months ago, I received a new part for my office chair because I could easily put my hands on the warranty and receipt.

IRS announces simplified Home Office deduction method

July 8, 2013

Office in HomeHome Office deductions have always been, shall we say, a little complicated to figure out.  IRS recently announced that for 2013, a person that qualifies for the Home Office deduction, may take $5 per square foot of Home Office space up to a maximum of 300 square feet.  This “per square foot” deduction replaces keeping up with a percentage of your utilities, repairs, depreciation, mortgage interest (or rent), taxes and other related expenses.  Just as in the past, deduction for Home Office is only allowed if the business portion is exclusively used on a regular basis for business.  This method will help some (especially the organizationally impaired) but may result in a lower deduction than the percentage of actual expenses allowed if a person elects to keep records.  www.MyTaxBuddy.com can help you simply keep up with the detailed records so your tax professional can help you decide which method is best for you.


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