Home Office Deduction S Corp Shareholder

The answer is yes. Ways to get a deduction there are two ways s corporation owners can get a tax benefit for their home office expenses. The s corporation can pay you rent for the home office.

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The third option being reimbursed under an accountable plan provides the greatest tax.

Home office deduction s corp shareholder. One is to claim a miscellaneous itemized deduction for unreimbursed employee. The s corporation gets a deduction and the shareholder gets a tax free reimbursement. Whether you operate as an s corporation or a c corporation you get minor zero or negative benefit when you rent an office in the home to your corporation. For home office expenses shareholders can be reimbursed for an allocated portion of their home maintenance expenses including mortgage interest property tax insurance utilities home internet trash and repairs and maintenance.

Normally you can t cleanly take a home office deduction on an s corporation tax return. Either you rent a portion of your home to the s corporation as office or storage space or the s corporation reimburses you for the home office use under an accountable plan. I used to report it directly on schedule c but now what. There are two options.

Prior to the irs making a recommendation to use the accountable plan and subsequent reimbursements to the employee or shareholders taxpayers would charge their corporation rent and declare the rent as income on schedule e. Yes there is a way to claim a home office deduction with an s corp. Accountable plan for s corporation deductions and reimbursements. You must complete an accountable plan.

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. Here are the steps you need to take to deduct your home office as an s corp. Technically the owner of a corporation can claim tax deductions for a home office in one of three ways two of which are pitiful and need rejection. 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.

Office in the home deduction limitations for s corporation shareholder employees. Twenty five years ago congress enacted a law prohibiting the deduction of expenses related to the rental of a portion of one s home to their employer. Can you still get a deduction for your home office if you are an s corporation shareholder. Rent office to the corporation.

A natural follow up question that many ask is well now that i am an s corporation shareholder employee can i still take the home office deduction. Ok but not elegant. It s very common for sole proprietors to form an entity and elect s corporation status on it to mitigate the self employment tax burden. The s corporation can pay you for the costs of a home office under an accountable plan for employee business expense reimbursement.