For many different reasons, working from home has become exceedingly popular in the last couple of years. Whether you mostly work out of your home office or only use it on special work occasions, you may be eligible for a valuable tax deduction.
Many taxpayers believe taking the home office deduction increases their chances of facing an IRS audit. According to H&R block, this notion is mostly a myth thanks to the proliferation of home offices across the country. Still, you can take certain steps to minimize your chances of receiving an audit notice.
Make your home office look like an office
Everyone knows what offices look like. If your home office also looks like a recreational room or family den, you may have a hard time defending your deduction. Therefore, you should resist the urge to put a dartboard, pool table or other private furnishings in your home office. A few family photographs or trinkets are probably acceptable, however.
Keep personal records somewhere else
If you have a filing cabinet in your home office, it may be tempting to store personal financial records and other documents in there too. Doing so, though, may blur the lines between a deductible home office and a nondeductible personal space. Therefore, you should only store business records in your home office.
Reserve your office for only business purposes
Your home office may be a convenient place to escape from your family at the end of the workday. If you play video games, watch tv or surf the internet there, though, you may not be able to take the full deduction for your home office. Consequently, you should reserve your office exclusively for business purposes. Anything else you do, you should do somewhere else.
Ultimately, while the odds of receiving an IRS audit solely because of your home office deduction are low, keeping your home office as separate as possible from the rest of your home may give you some peace of mind.