Home Office Deduction S Corporation Shareholder

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. 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. Here are the steps you need to take to deduct your home office as an s corp.

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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 corporation shareholder. Rent office to the corporation. When a business owner incorporates as an s corporation the home office deduction is not available to the corporation without some workarounds. The third option being reimbursed under an accountable plan provides the greatest tax. Office in the home deduction limitations for s corporation shareholder employees.

The answer is yes. 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. Accountable plan for s corporation deductions and reimbursements. How to calculate the deduction for an s corp home.

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. An s corporation can pay rent to a homeowner including a shareholder in the corporation and deduct it as an expense but. The s corporation can pay you rent for the home office. I have a reimbursement plan set up with the s corp than includes a small percentage of my mortgage interest internet hoa dues etc.

However i m wondering if the s corp can just reimburse me using the safe harbor method 5 per square foot up to 300 square feet. You must complete an accountable plan. Can you still get a deduction for your home office if you are an s corporation shareholder. The s corporation gets a deduction and the shareholder gets a tax free reimbursement.

Yes there is a way to claim a home office deduction with an s corp. 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. I own an s corp and my home office qualifies for the home office deduction. 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.

Ok but not elegant. There are two options. 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. 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.