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Your Tax Questions Answered Here:
Can you deduct a home office and a business office?
Question. If you have an office outside your home—say, downtown—can you have a tax-deductible office inside your home for the same trade or business?
Q. Who says that?
A. The IRS.
Q. Show me where they say that!
In IRS Publication 587, the IRS says this:
Your home office will qualify as your principal place of business if you meet the following requirements: You use it exclusively and regularly for administrative or management activities of your trade or business. You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.
The quote above mirrors the law and legislative history. Note the following points:
- The administrative office is a "principal" office.
- It would help if you used this office exclusively for business.
- It would be best if you used this office regularly for business.
- It would be best if you did your administrative work in your home office.
- It would be best if you did not do your administrative work in the office outside the home.
Here is a second important quote from IRS Publication 587:
You can have more than one business location, including your home, for a single trade or business. The IRS makes this rule very clear and straightforward: you may have more than one office for your business, including an office in your home.
If you want to walk through your options and new changes, let's talk.
We are a CPA firm specializing in tax planning and CFO services. And we will also prepare your income taxes and take care of your financial planning. If you're ready to take the guesswork out of your finances and save money along the way, then our CFO, bookkeeping, and tax services are what you need.
Miguel A Palma CPA, PFS, CGMA
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