Would a Home Office Work for You?

home-officeHome office vs. regular office

You bring your bedhead in the a.m. to the kitchen. At around 7:30am you have your morning coffee/tea. You check email, and you start to reply to a few of them. The minutes are ticking by. Next thing you know it’s 9:00am.

Then your cell phone rings and it’s a big referral source. You take the call but your cell phone dies. Now they are calling you on Skype. You click answer with video, but you forget that you are still in your PJs with your yucky t-shirt and major bad hair!!!

Oy vey. Where did the time go?

Do you ever feel like sometimes you work at home and never make it into the office?

Do you sometimes think that you should ditch your office and just work out of your house? You could save some serious money (read below) such as no rent and maybe some tax deductions.

Before we get into the economics of home office vs. regular office, you need to think of a few things about having a home office as your primary place of business.

  • If you have other people in your house, like crazy wild kids, its going to be pretty hard for you to get things done – unless you have a separate (presidential) wing where you can go. You need a quiet space.
  • If you had a home office, would you have that cabin fever feeling and feel like you need to get out of the house?
  • Would you find it hard to separate working at home from shutting down and relaxing at home?

There are 4 key ways that you save money if you have a home office:

1. No rent.
2. Less gas because are you not driving to work.
3. Eating from home. It’s usually cheaper.
4. Potential tax deductions. Remember to consult your tax professional for specific advice to your situation

Attention smart money saving tax peeps.

The IRS has specific rules as to whether you can claim some tax deductions from working at home.

  • You must regularly use part of your home for exclusively doing business.
  • You also need to show the IRS that your home is your principal place of business.

The current way to take a home office deduction is to fill out form 8829. It has 43 lines of financial stuff that you/your CPA fills out. You have to figure out what % of your house your office makes up. Then you have to put in all of your expenses like mortgage interest, utilities, and property taxes. It’s like baking a cake!!!

The key is … you have to track all of your expenses for the year, keep financial records, then give it to your CPA. Tons of work but it could be worth it.

Starting in 2013, the IRS is giving you a simpler way to take a home office deduction. The catch is the cap is $1500. It boils down to a $5 per square foot deduction with a cap of 300 square feet. Click here for the deets: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Simplified-Option-for-Home-Office-Deduction

Bottom line, if you are working from home – part time or full time, or considering doing the home office thang, call your accountant and see how much money you could save in taxes.

Once you know this, estimate how much you would save in rent, gas, and food. Now you have could have some extra money to invest, pay down debt, or use in your biz.

Yes, I have a normal office. But I am writing this from home with my bedhead and coffee! Is it just me or do we all wake up with wild hair?

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