What would you do?

[tpnl]

Taxpayer is self employed and lives with her boyfriend. She wants to take a home office deduction. She provided the expenses : mortgage interest, utilities etc. Taxpayer claims she helped pay the bills.

[luke]

If

If she meets all the criteria (exclusively an office) and she is an OWNER sure? (ask her to take photos of the "office" just in case IRS would question it?) I always try to explain to "new" clients that the home office deduction is not really worth the effort (and cost) and could potentially be a red flag for further review by the IRS (whether it actaully is or not?) Then they usually say, well just forget it then....

[Peachie]

I think you do

If she meets all the criteria (exclusively an office) and she is an OWNER sure? (ask her to take photos of the "office" just in case IRS would question it?) I always try to explain to "new" clients that the home office deduction is not really worth the effort (and cost) and could potentially be a red flag for further review by the IRS (whether it actaully is or not?) Then they usually say, well just forget it then....

your clients a great disservice when you "scare" your clients out of this deduction when they are legitimstely entitled to it. So what if it's a red flag. Are you here to help your taxpayer or the IRS? I would ask the client all of the pertinent questions to determine if he/she is entitled to this really good deduction. JMHO.

Peachie

[MRPLOW]

I have never had a client audited for business use of home yet.

I do about 25 of them per year, for over over 10 years.
That is easily over 200 business use of home's with ZERO audit's.

[ChEAr$]

your clients a great disservice when you "scare" your clients out of this deduction when they are legitimstely entitled to it. So what if it's a red flag. Are you here to help your taxpayer or the IRS? I would ask the client all of the pertinent questions to determine if he/she is entitled to this really good deduction. JMHO.

Peachie

I will disagree with the Georgia Peach in cases where the deduction doesn't save enough tax to cover the added fee I charge.

(grin)

[ddoshan]

Sounds like she does not own the home. If not, but the office is used regularly and exclusively as a principal place of business then maybe she could consider amounts she contributes towards household expenses such as mortgage payment, utilities, etc as rent and take the appropriate percentage.

Then maybe I have misuderstood the post.

[Peachie]

I so agree

I will disagree with the Georgia Peach in cases where the deduction doesn't save enough tax to cover the added fee I charge.

(grin)

in that case. Wouldn't want my T/P thinking I'm not looking out for their REAL bottom line. :-)).