![]() If we wanted to find out, we had to do an examination. Home office expenses were included on Schedule C, but it was not really identified as to how much of that total was related to home offices. "The purpose of putting out the form was to do just the opposite," Mr. (which, by the way, eschews "audit" in favor of "examination"). Perhaps more important, a check of the home office forums on several computer-based electronic information systems suggests that many taxpayers believe that claiming a home office deduction will lead directly to an audit. ![]() required people claiming the deductibility of a home office to file a separate form, Form 8829, to document their case. The 1991 tax year was the first time the I.R.S. Roberts said, down sharply from 1990, when nearly 2.9 million taxpayers checked a box on Schedule C indicating that they were taking deductions for home office expenses. In 1991, about 1.6 million taxpayers claimed home office deductions, Mr. will almost certainly disallow the deduction. If children in the family use the personal computer more than 50 percent of the time, for example, the I.R.S. As a general rule, the closer to 100 percent that the equipment is used for business - documented with contemporaneous log-keeping - the easier it will be to win the deduction. In order to deduct the cost of that equipment, an executive or business owner who works at home must be able to document the extent to which equipment is used for business. Photocopiers, dedicated word processors and facsimile machines were each found in about 10 percent of home offices. More than half of current home offices have a personal computer, Link's research shows, while two-thirds have a telephone answering machine, more than 44 percent a cordless telephone and 16 percent cellular phones. That's nearly twice the number who worked at home in 1988, when Link first started tracking the work-at-home market. Miller, vice president of Link Resources. More than 46 million Americans will do some or all of their income-earning work at home by 1995, according to the latest study by Thomas E. In other words, it is still possible to make a legitimate case for deducting the cost of home office equipment. "The deductibility of space is not related to the deductibility of computers used for business," said Donald D. ![]() So where does this leave the millions of executives who, using personal computers, telephones, modems, facsimile machines, pagers and other technological tools, find that they do at least some work at home? A full answer requires consultation with a tax adviser, but it seems likely that many people may still be able to deduct all or part of the cost of the equipment used for work at home. says that because of the wide variety of home offices it will decide the issue of deductibility on a case-by-case basis. guidelines, which include a number of other tests. The ruling did not change the existing I.R.S. 12 the Internal Revenue Service's rather narrow view of the deductibility of home offices.īy an 8-to-1 margin, the Court ruled that home office space is deductible only if it meets two primary conditions: It must be the place where the taxpayer's most important business is conducted, and it must be where the worker spends a substantial number of his or her working hours. The tax consequences of such offices are on a lot of people's minds, especially after the Supreme Court upheld on Jan. A recent study by Link Resources Inc., a research company in New York, found that 25 million Americans generate their households' main income from a business at home or maintain an office space at home to do work directly related to their primary jobs. Personal computers and other tools of the information age have allowed millions of workers to do some or all of their jobs from home, whether it is running a small business, "telecommuting" or simply catching up on paperwork after a day at the office. ![]()
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