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Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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This questions is in regards ***** ***** changes to the home office

Customer Question

This questions is in regards ***** ***** changes to the home office deduction for businesses based on the home office rules from 2004 and if I qualify. I thought I would not be able to qualify for it, however my CPA instructed me otherwise and told me to take the deduction. This is what he had to say:
"The rules you are familiar with are the old rules. Separate room, separate entrance, signage, etc … If you have an office outside of your house, then you wouldn’t qualify, but based on the fact that you are receiving 1099s, not W2s, tells me you qualify for the home office deduction."
I am a 1099 contractor in the state of Texas. I work as photographer as a contractor for a company. The company has its own small office about an hour away from my location but the office space is almost exclusively customer service representatives not photographers. I have to process all of my images at home with photoshop and upload them to our remote work server at the end of the day using software on my home computer. In other words, I have to do office work from home.
As far as office work at home goes - I have a laptop that I use for work in our living room of our apartment with all the software I need loaded on it.
Is my CPA correct - have the changes to the home office rules in 2004 mentioned above allowed me to qualify for a home office deduction in your opinion? Also where can I specifically find information on this 2004 home office rule changing?
Thank you
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Requirements to Claim the Deduction1. Regular and Exclusive Use.You must regularly use part of your home exclusively for conducting business. For example, if you use an extra room to run your business, you can take a home office deduction for that extra room.2. Principal Place of Your Business.You must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers.Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.Additional tests for employee use. If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests discussed above plus:Your business use must be for the convenience of your employer, andYou must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home..For a full explanation of tax deductions for your home office refer to IRS publication 587
Expert:  Lev replied 1 year ago.
If you are looking if there were any changes for 2004 tax year - we may compare this publications for 2003 and 2004 far - I do not see much difference - so you might want to communicate with your CPA what exact change is mentioned...I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.