Q: I am a sole practitioner and work from home. My computer, supplies, phone, etc., are at the home office. I do have an outside office available to me if needed, but it is part of a “virtual rental” relationship; they answer my phone there, send calls to me and collect my mail (which I go get once or twice a week). Can I write off my home office?
D.M., Westchester
A: As a sole practitioner, if you meet the criteria, you can deduct the home office on Schedule C (IRS form 1040). As I am not a tax specialist by any means, it would be wise, of course, to go over the circumstances with a qualified accountant or tax specialist.
Note that the space you are seeking to claim at your home as a deduction has to be exclusively used for the business. It must be either the actual principal place of your business, or where you meet clients or customers regularly, or a separate structure used solely for the business.
You may take the percentage of your property that is used as the home office (for example, 300 feet out of 1,800 total square feet of your home). One option then is to deduct the percentage of your home expenses: in the example here, that would be one-sixth, which is the equivalent to 300 out of 1,800 square feet. Eligible expenses include rent or mortgage, utilities, insurance and depreciation. Another option is the simplified method, which allows $5 per square foot up to 300 feet, so a total of $1,500 maximum.
The IRS publishes a helpful guide on the home office deduction, which you can find online at irs.gov/publications/p587.
Q: Can I deduct use of my car in my business?
J.K., Rancho Palos Verdes
A: You can, subject to certain IRS rules. And, once again, here I encourage consultation with a qualified tax professional.
There are two methods that I can find:
The standard mileage rate, which for this year is 67 cents per mile. Research indicates this figure changes each year. Keep track of the miles driven and multiply by that number.
The other option involves the actual expenses incurred. You deduct the costs of operating your vehicle, which can include gas and oil; insurance; registration fees; maintenance and repairs; and either lease payments or depreciation. Should the car also be used by you for personal matters, you then have to apportion between business and personal use based on mileage percentage.
The deduction cannot include driving to and from your typical place of employ. Trips to clients, between job sites and actual business errands are OK. If you choose the actual expenses method, adequate record keeping is very important.
Tax forms and instructions
The IRS has forms and instructions available to provide helpful guidance on tax matters, which you can find online at irs.gov/forms-instructions
Ron Sokol has been a practicing attorney for more than 40 years, and has also served many times as a judge pro tem, mediator, and arbitrator. It is important to keep in mind that this column presents a summary of the law, and is not to be treated or considered legal advice, let alone a substitute for actual consultation with a qualified professional.
