Home Office Deduction S Corp

Here are the steps you need to take to deduct your home office as an s corp. The s corporation s deduction of the home office expenses was disallowed because the s corporation had reported net losses for the years under review. If you have a home office and recently transitioned your business to an s corp you ll want to understand the steps you need to take in order to continue to take the home office deduction available to you.

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The s corporation can pay you for the costs of a home office under an accountable plan for employee business expense reimbursement.

Home office deduction s corp. But all was not lost because expenses disallowed due to the income limitation would carry over to subsequent years and could be deducted to the extent of s corporation net income in those years. Why home office deductions can be a problem for s corporations self employed individuals whose businesses are set up as sole proprietorships or business entities treated as partnerships for tax. In other words unlike the situation with a sole proprietorship and that 8829 form mentioned a moment ago no tax form exists for throwing a home office deduction onto an s corporation tax return. Accountable plan for s corporation deductions and reimbursements.

Many taxpayers have trouble with this area and they fear that such deductions could trigger an irs audit. For business owners who restructured their businesses as an s corp a home office deduction can get complicated and many avoid doing so entirely. S corp home office deductions can be accomplished on your own. You must complete an accountable plan.

The s corporation can pay you rent for the home office. The third option being reimbursed under an accountable plan provides the greatest tax. Normally you can t cleanly take a home office deduction on an s corporation tax return.