Many benefits come your way when you take the opportunity to work from home. However, along with the benefits comes a change in many things, including tax deduction options. Looking over the expenses you will incur, don't forget that you can deduct a portion of your home's utility expenses for business purposes. The steps below help to achieve this.
Instructions
1. Track the utility expenses from January 1 through December 31 of the tax year. Keep records listing the total utility usage for each month and for the year's total.
2. Measure your home office and compute the square footage.
3. Divide the total square footage of the entire house into that of the home office. The first two digits after the decimal point give you the percentage you need. If necessary, round to the nearest percentage point.
4. Multiply the total electricity usage (for 1 year) by the percentage arrived at in step 3. Make a note of this amount.
5. Repeat the last step for water and gas (if you have both of these utilities).
6. Add the amounts of each utility deduction, and put them on the tax form line that requests the amount of utilities on your Schedule C.
Tags: home office, square footage, utility expenses, your home
