We all know that Home Office Expenses regarding working from home has its perks – no commute, comfortable clothes, and the ability to have snacks at your desk without judgment. But did you know that it also has financial benefits? Specifically, the ability to deduct certain expenses from your taxes!
Here’s a quick guide on how to calculate the percentage of your home office expenses that you can deduct from your income taxes, in a fun and easy-to-understand way.
Step 1: Measure Your Space
First things first, you need to figure out how much space you’re using as your home office. This is where a tape measure comes in handy (or if you’re feeling fancy, a laser measuring tool). Measure the square footage of your designated home office area.
Pro tip: If you’re struggling to figure out the square footage, use a ruler to measure the length and width of the room and then multiply those numbers together. It’s like math class all over again!
Step 2: Measure Your Whole House
Now that you know the square footage of your home office, it’s time to measure the entire house. This is where you can let your inner real estate agent shine. Measure every room, hallway, and closet (yes, even the closets).
Pro tip: If you’re feeling lazy, you can use online tools like Zillow to get a rough estimate of the square footage of your house. OR look at your purchase agreement or rental agreement – the cheat sheets!
Step 3: Do the Math
Now that you have the square footage of your home office and your entire house, it’s time to do some math. Don’t worry, it’s not as scary as it sounds.
Here’s the equation: (Home Office Square Footage / Total House Square Footage) x 100 = Percentage of Home Used for Home Office
Example: Your home office is 150 sq ft and your house is 1,500 sq ft.
150 / 1,500 = 0.1
0.1 x 100 = 10%
That means 10% of your home is used for your home office.
Pro tip: If math isn’t your thing, you can use online calculators to do the heavy lifting for you.
Step 4: Save Money on Taxes
Now that you know the percentage of your home that is used for your home office, you can deduct that percentage of your home-related expenses from your taxes. These expenses include mortgage interest, property taxes, insurance, repairs, and utilities.
Pro tip: Keep all receipts and records of your expenses to support your claim.
In conclusion, working from home has its perks and one of them is the ability to deduct certain expenses from your taxes. By following these simple steps, you can calculate the percentage of your home office expenses and potentially save some money on your taxes. Just remember to keep all your receipts and records of your expenses and consult with a tax professional or accountant to ensure that you are calculating the percentage correctly and that you understand the specific requirements and guidelines.
So, don’t be afraid to have fun with your taxes, and happy saving!
*Please note that this is for general guidance only and you should consult with a tax professional for specific advice on your situation