Home Office Deduction

[Sue]

Is there any pitfalls in taking the home office deduction?

Financial planner has an office in the home, he heard office in the home leaves you open for an audit.

[jainen]

Everybody

Everybody is open to audit as a normal part of our tax system. I don't see that as a problem unless they are taking tax positions that can't be supported.

[Sue]

Thanks

That's what I told him.......

[Brian EA]

Is there any pitfalls in taking the home office deduction?

Financial planner has an office in the home, he heard office in the home leaves you open for an audit.

The only pitfall is not taking it

[ecb34691]

Take it. Remember then, your business miles begin once you leave the house, because your commuting miles are from your bedroom to your in home office.

[Matt Sova]

Soliman

Is there any pitfalls in taking the home office deduction?

Financial planner has an office in the home, he heard office in the home leaves you open for an audit.

The thing he is worried about is the stupid Soliman case, which governed the OIH for most of the 90's. Congress wrote a law to shoot down the Supreme Court ruling on Soliman in 1997 effective 1/1/99. So for tax years 1999 and forward there is no "audit risk" to taking the OIH.

[Gary]

Recapture

Remind him that if and when he sells his home, he needs to recapture the depreciation he took on the office in home.

[Bees Knees]

So for tax years 1999 and forward there is no "audit risk" to taking the OIH.

Well, there is an audit risk in that the IRS computers score each return for potential audit. Any Schedule C activity will increase the score, as will Office in Home and mileage deductions.

Something that will decrease the score is having the return prepared by a tax professional, so just tell the client any audit risk to taking office in home is cancelled out by having you, the tax professional, prepare the return for them.