Home Office Expenses S Corporation

One is to claim a miscellaneous itemized deduction for unreimbursed employee.

Home office expenses s 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. The s corporation pays those business expenses carefully applying the rules of the accountable plan reimbursement arrangement. The s corporation can pay you for the costs of a home office under an accountable plan for employee business expense reimbursement. 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.

The s corporation gets a deduction and the shareholder gets a tax free reimbursement. I never had an issue deducting my home office expenses on my proprietorship tax return but now that i m operating as a corporation i want to make sure i get the same benefit with my s corporation. Here s a simple example of how this reimbursement works mike a shareholder employee works out of a home office for his s corporation acme. For business owners who restructured their businesses as an s corp a home office deduction can get complicated and many avoid doing so entirely.

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. This link at a reputable tax professionals web. An s corporation may be able to claim the entire amount of allowable home office deductions using an expense reimbursement plan. Establish an accountable plan as an employee the s corporation may elect to reimburse you for allowable business related expenses including a home office that it requires you to maintain as a condition of employment.

This is because of section sec 274 that prohibits a shareholder employee from deducting home office expenses. Simple s corporation home office deduction example. You must complete an accountable plan. Here are the steps you need to take to deduct your home office as an 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. Accountable plan for s corporation deductions and reimbursements the third option being reimbursed under an accountable plan provides the greatest tax savings. However the share holder can rent the space to the s corp and report it on schedule e and the s corp can deduct the furnishings etc. Ways to get a deduction there are two ways s corporation owners can get a tax benefit for their home office expenses.

S corp home office deductions can be accomplished on your own.