Home office in Studio Apartment

[LCP]

that's why allocation is used for those purposes. One should use the area and computer exclusively for the office. Step out/away from the area when engaging in personal calls, use a different computer for personal issues.

What kind of "allocation" is being discussed here? I thought the primary issue with Home Office is whether it really needs to be an all or nothing situation. Is somebody suggesting that some kind of personal use needs to be allocated for personal activity in a classic office situation?

Thanks to all for all of the input BTW !!!

[taxea]

I have a cat who insists on protecting the papers on top of my desk while I am trying to work on them.

Mine not only protects them, he shreds them

[TAXNJ]

Maybe

You are allowed to have accessories on your desk such as a picture or vase. That doesn't disqualify the space. Just consider the cat an occasional accessory on the desk.


Linda EA

If the picture or vase is of personal nature and not business related you will disqualify.

[oceanlovin'ea]

accessories

You are allowed to have accessories on your desk such as a picture or vase. That doesn't disqualify the space. Just consider the cat an occasional accessory on the desk.


Linda EA

[jsamans]

Taxpayer has no other office and works full time at home remotely by computer. The potential deduction is significant as he lives in Manhattan. Can he qualify for a home office without having a separate room used exclusively as an office?

To understand the home-office doctrine and why the IRS takes the position it does, one must start with the understanding that personal expenses are not allowed to be recast as business expenses. That's why there is a requirement for 'exclusive' business use in claiming a home office, even though the typical employee working in a cube farm spends a considerable amount of time doing personal things, decorates his or her cube with personal items, and generally treats the cube as an extension of his or her home (and indeed, a business owner who chooses to rent separate space may do all of these things with impunity).

It's the same rationale as why someone who has no tax home is not permitted to claim travel expenses: the amounts spent are the same, but the simple fact that the entirety of an itinerant's living cost would then be borne on a tax-free basis would be an infringement on other taxpayers.

Think about each case in the context of this personal-vs-business expense rationale, and usually the answer of whether or not a place qualifies as a home office becomes pretty clear pretty quickly. In a 300 sqft space, the odds that anything is exclusive are low, but a big open loft can clearly accommodate some exclusivity without interior walls.

[kathyc2]

that's why allocation is used for those purposes. One should use the area and computer exclusively for the office. Step out/away from the area when engaging in personal calls, use a different computer for personal issues.

We all hear the horror stories of when IRS doesn't allow deduction, but what we don't hear is when they allow it, and also the vast majority of deductions that they don't question. One of the questions I ask clients is are they doing anything in their home office that they would not be doing if they were renting office space elsewhere or working in a corporate office as an employee. I explain the rules and potential consequences and then leave it up to client if they want to claim or not. Unless they I feel they are lying or stretching the truth so much that I wouldn't want my name on the return, I will take the deduction if they tell me they qualify. IMO, I think people try to stretch the % of business use on cell phone more than they do on HO.

[taxea]

HO is a grey area where judgment needs to come into play. If we take the "exclusive" quite literally, no one would be allowed the deduction as we all take personal calls, look up personal internet stuff, etc while at the "home office".

that's why allocation is used for those purposes. One should use the area and computer exclusively for the office. Step out/away from the area when engaging in personal calls, use a different computer for personal issues.

[TAXNJ]

Not all

Not all of us!

Should not mix business with pleasure. Sounds like an allocation needs to be done for those that do.

[kathyc2]

HO is a grey area where judgment needs to come into play. If we take the "exclusive" quite literally, no one would be allowed the deduction as we all take personal calls, look up personal internet stuff, etc while at the "home office".

[Bees Knees]

Perhaps the animal is a "Security Cat" whose main job is to guard and protect the valuable paperwork inside the desk.

I have a cat who insists on protecting the papers on top of my desk while I am trying to work on them.

[TAXNJ]

High

I have a client who owns a used car dealership and every year he tries to deduct his wife's poodle maintenance fees because according to him it is a security dog!

Heard of various maintenance expenses but that sounds like a HIGH maintenance expense your client may have

[ATSMAN]

Well, there are still possibilities. Perhaps the animal is a "Security Cat" whose main job is to guard and protect the valuable paperwork inside the desk. Then not only do you preserve the Home Office deduction, but vet bills, litter boxes, cat food, and scratching pads come into the mix. (I've heard suggestions along this line from various MLM clients).

I have a client who owns a used car dealership and every year he tries to deduct his wife's poodle maintenance fees because according to him it is a security dog!

[JohnH]

Well, there are still possibilities. Perhaps the animal is a "Security Cat" whose main job is to guard and protect the valuable paperwork inside the desk. Then not only do you preserve the Home Office deduction, but vet bills, litter boxes, cat food, and scratching pads come into the mix. (I've heard suggestions along this line from various MLM clients).

[TAXNJ]

The cat

I think the other problem with deducting an area that is not partitioned off has to do with little minor personal use issues. If you have a separate room, the door can be closed and off limits when not in use. But if you say the desk in the corner on the far side of the living room is your office, it is easy for minor little things to disqualify it. For one thing, if your home is so small that you can't have a separate partitioned space for business, where are you going to pay your personal bills? If that desk is the only desk in the apartment, then more than likely you occasionally will use it to write out the check for the electric bill. You are likely not going to walk over to the kitchen table just to pay personal bills when you have a desk siting there in the corner with all your pens and paper and drawers to keep your stamps. What if you have a cat, and the cat jumps up on the desk to sleep when you are not using it? You just lost your claim that it is exclusively being used for business. Thus, I think when push comes to shove, the IRS is going to win the argument in court when you try to claim that desk in the corner is being used exclusively for business.

Bees Knees, thanks for the "cat" reference. Did not think of that important consideration. This post and others needed a little humor and that was one of the best. But animals cannot be claimed as "dependents" anymore, so it might not have an affect, compared to years ago when social security numbers did not have to be provided with one's dependents info on the return, and then, when that Social security number requirement came into effect, the IRS saw a dramatic drop in dependents on tax returns!

But you bring out a great point to consider, that "exterminators" are maybe important in case one has a bug enter their office and You just lost your claim that it is exclusively being used for business.

Thanks for the humor.

[taxea]

JMO but if it's a small studio apartment (not a loft), it's going to be difficult to justify that a portion of 450 square feet is set apart exclusively for work if there is an audit. I had a continuing education course in 2005 where an IRS agent spoke about this. He said the IRS' position was that if you are trying to declare a portion of a regular use bedroom as your home office - it will be denied. For example if you declare the desk at the end of YOUR bed is your home office - nope. The desk in the guest bedroom - perfectly fine.

Had a golf buddy who was audited and his wife tried to declare that the kid's bedroom closet had been turned into their home office desk. All was fine until they admitted the kid stayed with them every Saturday night in that room. The IRS rejected it as saying that was the kid's active use bedroom and not an exclusive use office.

if the 450 sqft is in the kids room and not used by them when they are in residence then it qualifies. you can''t take the entire room only allocate the portion used exclusively as an office..