Claiming the home office deduction continues to be an IRS audit red flag.

Posted on: April 6th, 2015 by Andrew Clark No Comments

Did You Know ….

With the tax deadline just around the corner, please be aware of the following tip from The Kiplinger Tax Newsletter (March 27, 2015):

Claiming the home office deduction continues to be an IRS audit red flag.

The Service is often successful at knocking down the write-off, as shown by this case.  A sole proprietor claimed that he used the living room of his small home for business.  He deducted a ratable (estimated) portion of his mortgage interest and utilities.  But, the IRS nixed his write-off, and the Tax Court agreed.  Because access to all the rooms in the home was through the living room, the space wasn’t used solely for business, which is a prerequisite for taking the deduction (Savulionis, TC Summ.  Op.2015-19).