Tax Advantages of Working at Home

Thanks to broadband technology and laptop computers that rival desktops, more people can work at home and leave the commuting to the rest of the world. To make this a more viable working option, Congress passed the Taxpayer Relief Act of 1997, which contained a modification of the IRS definition of principal place of business. Beginning in 1999, the new rules allow those who don’t have offsite office space to deduct the expenses of a home office. Contractors, sales reps, consultants, and others who perform their services outside their office but need a home office can benefit. However, you must use the office exclusively and regularly for business. In addition, if you use part of your home for business such as paperwork, store records, inventory, or samples, you may be entitled to a deduction. You can also convert or build a separate structure that’s not attached to your house. Detached garages, carriage houses, sheds, small barns, etc. make great home office conversions.