Home Office Reimbursement S Corp

However if you help your clients set up an accountable plan everyone wins.

Home office reimbursement s corp. An s corporation may be able to claim the entire amount of allowable home office deductions using an expense reimbursement plan. The s corporation can pay you for the costs of a home office under an accountable plan for employee business expense reimbursement. 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. Download the s corp accountable plan reimbursement worksheet.

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. Assign each expense claimed to the appropriate expense account category so that these expenses may be deducted from the s corp s income on its tax return. But these deductions are of little or no value because of the 2 income floor imposed on schedule a and the add back of. Enter the amount of the payment into your s corp s records as a reimbursement for employee expenses.

Accountable plan for s corporation deductions and reimbursements the third option being reimbursed under an accountable plan provides the greatest tax savings. S corp home office deductions can be accomplished on your own. For business owners who restructured their businesses as an s corp a home office deduction can get complicated and many avoid doing so entirely. An accountable plan must meet three requirements to pass irs muster.

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. The s corporation gets a deduction and the shareholder gets a tax free reimbursement. Many taxpayers have trouble with this area and they fear that such deductions could trigger an irs audit. Bonus for email subscribers.

I have a reimbursement plan set up with the s corp than includes a small percentage of my mortgage interest internet hoa dues etc. Yes there is a way to claim a home office deduction with an s corp. Given that office in the home expenses are not allowable if the office is rented to one s employer an s corporation shareholder employee could deduct office in the home expenses as miscellaneous itemized deductions. By being careful in how you structure the relationship between yourself and your s corporation there s a way you can benefit from the expenses of having a home office.

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. The shareholder gets a tax free reimbursement for the home office and other out of pocket expenses while the s corporation gets a deduction for the reimbursed amount.