Is My Home Office a Tax Deduction?


image courtesy of
image courtesy of
If you have an office in your home, you may be wondering how you can use it as a tax deduction. First, you need to determine if your office qualifies for the deduction. You can claim the home office deduction if:
  • Your home office is your primary place of work, and you do not have an office in another location (meaning you don’t have one “at work” and one “at home”)
  • You telecommute at the request of your employer (not because it is easier for you)
  • You are self-employed and make as much as your deduct (meaning you can’t do this if your business would be better described as an hobby that costs more than you make)
  • The space is used exclusively as an office and is not part of your living room, guest room, kitchen, etc.
For example, this is my current home office space:
Even though I spend a lot of time here, I can’t call it a home office because it is part of a bedroom. Plus, I also have an office at the university.

On the other hand, this is my husband’s office:
He is self-employed and does not have an office in any other location. His office is a whole separate building in our backyard. So, yes, we do claim this as a home office deduction.

If you have a qualifying home office, you can deduct some office expenses based upon its percent of your entire home’s square footage (office sqft / home sqft). You can include expenses such as real estate tax, mortgage or rent payment, insurance, repairs, and utilities. Be sure to keep good records of each of these expenses because tax payers who utilize the home office tax deduction are statistically more likely to have an audit.

Tax Deductions for Direct Sales

Tax Tips For Direct Sales
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Direct sales is a great career opportunity that offers high income potential and flexibility. There is a quote floating around that says over 82% of women who make over $100,000 a year do so through direct sales jobs. I have not been able to find the source of that data to verify the claim (it sounds a little high), but direct sales is a great opportunity to be your own boss and build a business around your schedule. It has been especially great for women looking to work from home. So, while you are out there working your business, don’t forget these deductions for tax time. If you have not filed yet, you still have time to claim them for 2014. If you have already filed your 2014 taxes, make sure you start keeping records to claim them next year.


Start-up Costs
When you start your direct sales business there is generally some type of kit that you purchase from the company. They provide you with some supplies or product to get started selling. You may also have expenses associated with setting up a web site or obtaining insurance. Up to $5000 of these business expenses can be deducted in your first year of business.


Home Office Expenses
You need a place to work, and your home office is another business expense that you can claim on your taxes. Any furniture, computer equipment, or office supplies (paper, pens, stapler, folders, etc.) that you buy for your business is a tax deduction. Under certain circumstances, you can also deduct part of your mortgage or rent payment and utilities as part of the home office deduction.


Marketing/Advertising Expenses
If you are going to have a successful direct sales business, you have to do some marketing. Marketing expenses can include that sticker you put on your car, registration fees for festivals where you have a table, and ads you place in local magazines or newspapers. In addition, any supplies that you purchase to help market yourself and your product can be deducted as a marketing expense. This includes things like pens, nail files, and other promotional material with your business name. You can also deduct the cost of purchasing and mailing catalogs to customers.


Travel Expenses
Many direct sales companies use the “home party” model for product marketing. Any driving that you do to a party location is a tax deductible expense. Mileage you drive to make customer deliveries is another tax deductible travel expense. So, be sure to record the dates and miles you drive for your business. Plus, if you need another reason to attend your company’s annual conference, remember that all of your conference expenses are a business travel deduction.


Business Supplies
I saved the best for last. One of the perks of being a direct sales consultant is being able to try all of the great products. The easiest way to sell is to be a walking billboard or showcase for your product. The products that you have on hand to show as samples are your business supplies. Those business supplies are a tax deductible business expense. When you share that with your friends, they will all want to join your team!