Can You Claim a Home Office?
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Answer the following questions to determine if you can claim a home office deduction:

• Do you have a separate area in your house you use regularly and exclusively for business purposes?

• After you deduct all your other expenses, will you still report more income than you plan to deduct with your home office deduction?

• Are you aware that claiming a home office deduction may increase your likelihood of experiencing an IRS audit?

• Do you realize that by claiming a home office, you have converted the portion of your home that you claim into a business property? This can have serious implications when you sell your house because the gain on the sale of the portion that is business property cannot be rolled over. You will have to convert the home office back to residential use a year before you sell. (Consult with an accountant for the exact mechanism here.)

If you answered Yes to the first two questions, you can claim a home office deduction. You do this by filling in a special form, IRS Form 8829, "Expenses for Business Use of your Home" when you file your taxes.

Excerpted from The Computer Consultant's Workbook Copyright 1996, Janet Ruhl