View Full Version : Self-Employment Taxes and the Home Office Credit

01-15-2014, 11:12 PM
I am self-employed and work as a freelance writer. I do most of my work for one company, but I do have projects going on with a few additional businesses. Regardless, I am slated to receive 1099 forms at the end of the year. Well, the end of this month, actually.

So, I am planning on claiming the home office credit since I work from home and dedicate an entire room of my house to my office. However, I have heard that you are far more likely to be audited by doing so. Does anyone know if this is true?

Also, does anyone have any tips about filing the home office credit?

01-16-2014, 09:21 AM
You would have to use the 8829 Tax Form to figure out the deductions you can make for your home office and you can also check out IRS Publication 587. In your case since you have a dedicated home office space that is used to perform your work (which in your case you do) you are eligible to deduct your home office as an expense and this also includes parts of your utilities, deductible mortgage interest or rent and real estate taxes to name a few. I don't see this being an increased risk for being audited and as long as you don't fudge anything on your taxes you got nothing to worry about.

01-22-2014, 02:36 AM
Make sure you or anyone else will ever use that space for any personal activities like making any non-business phone calls or other types of work.
The IRS likes to test this situation. Be careful even if it seems you have made it through this tax year or the next. If they ever come back on you, they will want to collect for past tax owed.

08-05-2014, 06:04 PM
It does increase your risk of audit. I would never forego a deduction just because it increases your audit risk. So long as you are qualified to take the deduction you should. Besides, the risk of audit is very small, so an increase to a very small risk is still a pretty small risk. And if you do get audited, so long as you do everything by the book, you won't have any problems. Of all the audits I have been through with clients, only once did I have to deal with an unreasonable auditor.

09-23-2014, 01:04 PM

First of all it is not a credit. It is a deduction for having an office in the home. The amount of the deduction is dependent on the percentage of your home office space in relation to the entire house. if your home office is 12 x 12 or 144 sq feet and the entire house is 3000 sq feet then you will be able to deduct approximately 5% of your house expenses on your tax return. And then if for example that percentage give your a deduction of $1,000 then the tax saving would be somewhere between $300 or $400 for a self employed person.

Then you have to ask yourself if it is worth the audit risk.


Carsten Werner
10-06-2014, 05:28 PM

what J Schultz said in the previous reply is exactly correct. I have done work from home for some time and I did in fact end up getting deduction of somewhere below $200. I stopped including this in my tax return the next year.

Instead utilize a shared office space near you, you might also want to incorporate and not be a sole proprietary. A corporation has several benefits where you can deduct plenty of cost for your business. If you are small you might want to become a S-Corporation, get advice from your CPA or Tax- Attorney on that matter.

Once you separated all your business clearly from your private cost, it will be much easier to claim deductions. You can get a Virtual Office address for less than $50 a month and the cost are fully deductible, you can have your phone answered separately, so you can concentrate on your work.

When ever you need to see a new client, you can meet in your office and just pay for the amount of time you use. Of course the cost for this is fully deductible as a business expense. The IRS fully recognizes this kind of a office model, since it is actually at a different commercial office location, you wont have any problems with being audited.

10-21-2014, 04:32 AM
I also agree it is deduction for your office because it is at home.This deduction depends upon what percentage of your office space to the total space in your house.