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).