What to Know about Home Office Deductions

With technology making it easier than ever for people to operate a business out of their house, many taxpayers may be able to take a home office deduction when filing their 2013 federal tax return next year.

Here are five important things the IRS wants you to know about claiming the home office deduction.

1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:

• As your principal place of business, or
• As a place to meet or deal with patients, clients or customers in the normal course of your business, or
• In the case of a separate structure which is not attached to your home, it must be used in connection with your trade or business
• For certain storage use, rental use or daycare-facility use, you are required to use the property regularly but not exclusively.

2. Generally, the amount you can deduct depends on the percentage of your home that you used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.

3. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.

4. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home, to figure your home office deduction. Report the deduction on line 30 of Schedule C, Form 1040.

5. Different rules apply to claiming the home office deduction if you are an employee. For example, the regular and exclusive business use must be for the convenience of your employer.

For more information see IRS Publication 587, Business Use of Your Home or by calling 800-TAX-FORM (800-829-3676).

Five Ways to Spot a Fake IRS Email

Be on the lookout for email scams circulating that fraudulently use the Internal Revenue Service name or logo as a lure – all to trick you into giving up personal and financial information. The scammers can then use your information (such as your Social Security number, bank account or credit card numbers) to commit identity theft and steal your money.

Here are five things the IRS wants you to know about phishing scams.

1. The IRS does not send unsolicited email about a person’s tax account or ask for detailed personal and financial information via email.

2. The IRS never asks taxpayers for their PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

3. If you receive an email from someone claiming to be the IRS or directing you to an IRS site:

Do not reply to the message.
Do not open any attachments. Attachments may contain malicious code that will infect your computer.
Do not click on any links. If you clicked on links in a suspicious email or phishing website and entered confidential information, visit IRS.gov and enter the search term ‘identity theft’ for more information and resources to help.

4. You can help shut down these schemes and prevent others from being victimized. If you receive a suspicious email that claims to come from the IRS, you can forward that email to a special IRS mailbox, phishing@irs.gov. You can forward the message as received or provide the Internet header of the email. The Internet header has additional information to help us locate the sender.

5. Remember, the official IRS website is http://www.irs.gov. Don’t be confused or misled by sites claiming to be the IRS but end in .com, .net, .org or other designations instead of .gov.