I run a small business out of my home, where I occasionally meet with clients and often receive deliveries. Every time it snows, I pay $20 to the kid next door to shovel -- and this weekend's blizzard will probably cost extra! Can I deduct what I pay him, plus the cost of the de-icing salt and shovels?
If you qualify for the home-office deduction, you can include these costs as maintenance expenses, says Clare Levison, a CPA in Roanoke, Va. You must use the regular method to calculate the deduction, based on your actual expenses, not the “simplified method,” in which you multiply the square feet of your home office by $5.
The amount you can deduct is prorated based on the percentage of your home devoted to your business activities. For example, if the space you use for your home office is one-fifth of the square footage of your home, then one-fifth of these expenses will be deductible. The same is true for utilities, rent or mortgage interest, and homeowners insurance premiums. “You should keep good records of your expenses,” says Levison. “It’s always best to get a receipt whenever possible.”
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Report these maintenance expenses on line 19 of IRS Form 8829, Expenses for Business Use of Your Home. For more information, see Instructions for Form 8829. To find out whether you qualify for the home-office deduction, see IRS Publication 587, Business Use of Your Home. Also see Most-Overlooked Tax Breaks for the Self-Employed.
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