Will a home office deduction trigger an IRS audit?

| Jan 8, 2021 | Federal And State Tax Collections

Everyone loves saving money, and we regularly look for new ways to be able to do it. Recently, more and more of us have been able to work from home. This unique work situation may qualify you for a tax deduction for your home office, but should you take it?

Many people were afraid of filing a home office deduction on their taxes in fear of the IRS auditing them in the past. With changes to how the IRS handles this deduction as recently as 2013, does that mean the IRS will not audit these deductions?

Preparing for the IRS

Like many things, no one can predict how the IRS will respond to certain things. The good news is that there is no formal procedure or law in place to audit anyone who takes a home office deduction. However, it is still possible for the IRS to decide to audit you if they should see this deduction on your taxes. The best thing you can do to protect yourself from an audit is to prepare for one.

The first thing you can do to prepare for an audit for a home office deduction is to make sure that your home office is legitimate. To earn this deduction, your home office needs to be for the exclusive use of your work. This means that working in your kitchen and calling it your office will likely not be enough. The office area will also need to be the primary work area, like where you meet with clients and colleagues.

Be sure to keep extensive documentation regarding your home office. If you have proof of work meetings at your office, office expenses receipts, and any other evidence of your work in the office, it can considerably improve your case in the event of an audit.

Stay thorough in your home office

If you want to deduct your home office taxes, you should not assume the IRS will automatically audit you. While there is no guarantee if it will or will not happen, keeping your office’s necessary documentation and only using your office for work purposes should help considerably in an audit.

 

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