I am in the process of moving for my job and the new position will require me to work from my apartment. I have heard ramblings about having certain tax breaks if someone works from their apartment. Anyone know about this. Oh by the way, it's not my own business I will be working for the state in which I live.

aqua@home

I know in Canada, you can write-off a lot if you work out of your home. Here, we figure out what percentage of our home is used for the business. If it's 30% (or whatever) then we can write-off 30% of our utility bills, rent mortgage, rent, taxes, etc. If you build for the business you can write that off entirely. That's how it is here, I don't know about there.

AtlantaTaxExpert

If you work for someone else, you CAN deduct costs (rent, utilities) for work done at home if you have a home office that is being used EXCLUSIVELY for work. Further, the deduction is an ITEMIZED deduction, and renting makes it unlikely that you will itemize.

ScottGem

I've been running a part time biz out of my home for almost 20 years. I have decided NOT to take the home office deduction because the rules are very strict. As ATE explained, the space must be used EXCLUSIVELY for work use. For example, lets say you setup a desk in a corner of one room. If you use that desk to pay your bills, then it fails the exclusivity test.

You will have to figure out exactly what percentage of your total space is devoted to this work space. A typical 2 bedroom apartment might have about 1000 sq ft. If you setup a desk for work, it might be about 20 sq ft. That's 2%. So if your rental is $750/mth you can deduct $15 or $180 for the year.

Taking the Home Office deduction increases the chance your return might be audited. For an $180 deduction, is it worth it?

Another issue, which wouldn't not apply to you as a renter, is when you sell the home. Since you are taking a partial deduction as commercial space, then part of your home sale has be figured as sale of commercial property and that can complicate your sale.

AtlantaTaxExpert

There is some dispute as to whether the Home Office deduction actually increases the chance of any audit. Over the past 15 years, I have had over 100 clients claim the Home Office deduction, and NO ONE has been audited to date. Of course, those who get audited are those who get greedy. A large deduction will generate an audit, and that is NOT an issue with my clients, as I follow the rather strict rules.

ScottGem

I bow to your greater experience. However, I still feel the potential deduction doesn't justify the complexities involved.

AtlantaTaxExpert

Your point has merit.

A fair number of clients, upon seeing the minimal impact the home office deduction has on their taxes, have in fact told me to redact out the calculation for fear of the potential audit.