Anyone who has ever run their own business knows there are challenges. For home-based businesses, there can be even more difficulties. There are tax benefits available that can ease the complications.
One of those benefits is a home office deduction allowed by the Internal Revenue Service (IRS). You might be able to claim the deduction if part of your home is used primarily for business purposes and use that space to make a profit.
There are requirements to claim the tax deduction
There are standards that your business must meet if you want to have a tax deduction on your home. That could include use of the home for:
- Equipment storage
- Regular business
- Rentals
You can claim a deduction if you rent or own the space and your run business from that location. To qualify, you must meet two basic requirements. You must conduct regular business there and use it only for business. It must also be the principal place of the business.
Determining if the space is the principal place of business
IRS requires you to show that the space is where you conduct most of your business. The main thing the IRS looks at is whether you are dedicated the space to your business only and that you regularly use it for the business.
You must calculate the percentage of the home used for business. People often claim another building on their property.
Dedicated business space is necessary
People run into problems when they try to claim an area of the home not being used only for business. It is important to understand the tax laws. That can help you avoid complications and meet the requirements.