Home Office Deduction Above The Line

Continuing from our example above.

Home office deduction above the line. Above the line deductions. Above the line deductions in some cases you can qualify for a tax break without. The home office deduction is not a red flag for an irs audit. Some common above the line deductions that you can take are for educator expenses up to 250 contributions to an ira saver s credit and there s a deduction for student loan interest payments another important deduction is for the self employment tax.

Deducting a home office is treated differently depending on your business type. Within tax deductions there are above the line deductions standard deduction and itemized deductions. If you re self employed and work out of an office in your home and if you satisfy the strict rules that govern those deductions discussed below you will be entitled to favorable home office deductions that is above the line business expense deductions for the following. The simplified method can make it easier for you to claim the deduction but might not provide you with biggest deduction.

Home office deductions on the rise americans claim more than 7 billion in home office expense deductions. Whether you qualify for this deduction is determined each year. There are two primary requirements to qualify for the home office deduction. This above the line deduction takes some pain out of your pesky student loan bill.

In this instance the mortgage interest you claim as a deductible expense would be an above the line deduction. Clearly many expenses are deductible too many to ever draw up a complete list. The line refers to the last line on page 1 of your form 1040 or form 1040a which is labeled adjusted gross income agi. If you repaid eligible higher education loans in 2018 you can deduct up to 2 500 in interest as an above the.

Common above the line deductions. Moreover with the simplified method you are not allowed a depreciation deduction. Be sure to keep good records especially when it comes to above the line personal expenses. You claim the home office deduction on line 30 of schedule c of your tax return.

Qualifying for the home office deduction. Therefore for our 120 square foot office in the above example the simplified method would allow a deduction of 120 x 5 600 which is significantly less than the calculated method allowed.