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?
Before we get into the economics of home office vs. regular office, you need to consider 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, it’s 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:
- No rent.
- Less gas because are you not driving to work.
- Eating at home. It’s usually cheaper.
- 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 use part of your home exclusively for 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 or your CPA fills out. You have to figure out what % of your house your office makes up. Then you get to take percentage of all of your expenses like mortgage interest, utilities, and property taxes. It takes some time, but is worth the effort.
You CPA will have a better idea of how the numbers play out. Then you’ll have more information to decide if a home office or a space in your house is the best fit for you.