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Self-Employed Home Office Deduction [Schedule C] Simplified Option for Home Office Deduction - YouTube
Channel: JJ THE CPA
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jj the cpa here hope you're doing well
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for the self-employed those that file
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schedule c or schedule f
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be sure that you're really analyzing can
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you take advantage of the home office
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deduction
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the home office deduction the irs a
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number of years ago came out with a
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simplified method and it's this
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it's how many square feet in your house
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are you using and dedicating to a home
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office how many square feet is it
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you take that times five bucks and
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that's your home office deduction
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now it is a maximum of 300 square feet
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that you get to include
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so if you're using 400 square feet well
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for the simplified method you only get
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to include up to 300 feet
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times five bucks which is then a fifteen
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hundred dollar deduction now on form
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8829 that's where this is in essence
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tied into which is the home office
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deduction but where you see this in that
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calculation is directly on schedule c
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and it's on line 30. now on schedule f
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it's pulled from the form 8829 and it's
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then reported as another deduction on
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line 32.
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now i don't want to deter you
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from if you want to do the long method
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as they would say
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you can pull together what your
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utilities are and your mortgage interest
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and real estate taxes and the insurance
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on your house and the maintenance and
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the utilities other than your first
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phone line and pull all those expenses
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together
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you can do the direct or indirect method
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on form 8829 which in essence takes a
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percentage that you're using for
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business purposes compared to the total
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percentage of your house it takes a
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percentage of those and all that good
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stuff but i'm just telling you i've been
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practicing for 29 years
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and i've never one time seen a home
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office deduction no matter how big the
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house is if you're doing the home office
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correct the calculation correct i have
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never seen a home office deduction more
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than fifteen hundred dollars if it's
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more than fifteen hundred
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i don't know how you're getting there
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not saying that you did something wrong
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but you probably you probably should
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really be double checking your number
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there but what i'm telling you is the
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simplified method isn't something that
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you then just get to go and say oh well
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yeah i'm just going to take the fifteen
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hundred dollars you actually have to
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have a home office okay that is in
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essence something you're using and
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dedicating to in essence run your
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self-employed business but the
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simplified method then you don't have to
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pull together all the receipts and all
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the things and do the big calculation
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not saying you shouldn't do it all i'm
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saying is that if i have a client and
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they have a schedule c or schedule f
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we're using the simplified method how
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many square feet are you using for
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business purposes in your house for the
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home office
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we're taking that square foot no more
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than 300 times five bucks and we're done
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with it it's a big deduction but don't
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miss it it's not a flag i am telling you
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that probably back in the 80s and the
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90s there was some
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people would call audit flags related to
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taking the home office deduction it's
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not the case anymore now i'm not telling
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you well because it's not an odd flag
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just take it i'm telling you is if you
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have it do not be afraid to take the
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home office deduction take it okay
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and the reason for that is that it
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reduces down your taxable income it
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reduces down your income subject to
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self-employment taxes fifteen hundred
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dollars easily saves you fifteen point
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three percent in taxes for
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self-employment purposes alone
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and then that fifteen hundred is going
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to save you whatever your applicable
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federal tax rate is and honestly
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down at the state level if you have a
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state income tax don't be afraid to take
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it as long as you just i do have one i'm
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looking at it okay i'm in my home office
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right it's dedicated now if you want to
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get into the nitty-gritty rules i'm
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going to give you a link to the form the
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instructions and the faqs by the irs
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that's your best source
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of finding the answer because i will
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tell you this
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sometimes you have to catch yourself
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are you just trying to find the answer
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that you want because you're just going
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to do it anyways don't find those
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answers don't just find the answer that
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you want find the real answer and the
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real answer
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is put out by the irs because the irs
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actually
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provides wonderful information on all
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subjects including this they go through
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scenarios there's a lot of information
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out there that's the source that you
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want to go but more what i want you to
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know is if you have it take advantage of
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it especially in this day and age many
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many more people than ever are working
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from home now if you're an employee
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there's no way to take this okay
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there's a very sliver that no one would
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really qualify for
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but i'm going to give you a link to that
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sliver which would be uh it's not you i
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promise you but i'm going to put i'll
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make a note right here just because i
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know there's going to be a few tax pros
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that say oh no there's that one sliver
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that's probably like 0.0001
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of the population that could take
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advantage of the sliver
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so i'll put the sliver it'll say sliver
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and i'll give you a link to where you
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can go look at the sliver you'll just be
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wasting your time most likely because
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it's not going to be you that qualifies
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for it
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all right
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i think that's all i wanted to say on
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this
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because it's getting missed and it's
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because people think it's an audit flag
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or oh my gosh you know they're going to
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do and if your tax professional is
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telling you that this will be the last
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year you're using them because any tax
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professional that says to you well it's
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an irs flag
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so what i mean can you take it or not is
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it a real deduction or not because if
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it's a real deduction
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then doesn't matter if it's a flag
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because the irs they come and question
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it yeah i can take it here's my
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documentation the irs goes away the irs
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is not a big bad wolf and scary but for
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some reason on the home office deduction
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it's a
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ridiculous uh folklore related to this
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okay simplified method the irs is like
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okay simple live management took it this
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day and age like everybody's working
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from home this is not me telling you
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just do it even if you don't have it no
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if you have it take it
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but back to tax pros okay cpa ea tax
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world they've been doing it a long time
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i don't care they ever tell you
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any any circumstances
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well that's an audit flag or the irs is
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going to question that they're lying to
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you
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lying
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there are no audit flags or your stories
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prove it there are no audit flags you
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know what audit flags are your return's
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wrong the math is wrong you have an
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idiot preparing your return and they did
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it wrong and the irs caught it because
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the math don't work or they're taking
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advantage of stuff that doesn't make any
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sense it doesn't match up with their
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uh other information
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right if you're self-employed and you're
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working from home
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it's not not a flag and even if it does
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get questioned and i'm telling you in 29
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years i've never had a home office
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deduction
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question which doesn't mean well then i
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can just take advantage of it any way i
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want just telling you
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even if they question it
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here's the documentation well how do i
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prove it pictures i mean showing it i
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mean
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how else would you how would you prove
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it to a friend that's how you prove it
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to the irs
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okay your tax bros should be saying
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here's how we prove it or this or that
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if you have tax pro that they feel their
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job is to tell you no
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get rid of them
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because their job is to tell you the law
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their the job is to tell you how it
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works it's not just for them to take the
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easy way out and feel all powerful
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that's an auto flag you can't take
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advantage of that
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get out of here what do i even prepare
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in returns
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okay just frustrating and it's on this
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subject that i hear it still to this day
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oh you know on the home office it's
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north when
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when is an audit flag take advantage of
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it all right i made the video too long
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which means not as many people will
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watch it but i'm glad you made it to
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here all right hey thanks for tuning in
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i love it if you subscribe and then
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don't you ever forget you've never met a
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cpa quite like me have a great one
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