Deduction for Rent if Work at Home?
 

Does anyone know about this possible deduction? I live in a studio apartment and I am self employed poker player.

Re: Deduction for Rent if Work at Home?
 

its a ratio of your work area divided by total square footage. seek qualified acct/tax prep advise.

Re: Deduction for Rent if Work at Home?
 

You can also discount a certain amount of your power bill, internet bills, etc...

Re: Deduction for Rent if Work at Home?
 

You should be able to make a pro-rata deduction for use of home as an office, based on area or some other such sensible criteria, this is certainly the case in the UK.

Mack

Re: Deduction for Rent if Work at Home?
 

Be VERY careful as the home office deduction is one of the harder deductions in the tax code to quilify for.

This is also a huge red flag and living in a studio it is going to be a VERY tough since the area must be used ONLY for the business and unless you have a large studio and you have your POKER ONLY area (does not have to have physical barriers) you will not qualify for the deduction.

Of course you can do what you would like but if your area is not exclusively used for poker and poker related activities you run a high chance of getting 'interviewed' by the IRS as this is a red flag deduction since most people do not properly take this deduction.

Good luck.

Re: Deduction for Rent if Work at Home?
 

If the 'wholly and exclusively' argument was rigorously enforced very little could be claimed, as it is fairness, and good faith from the tax payer, seem to be the most important considerations. If someone is trying to force through an allowance that is not legitimate then I agree with you though.

In this example say he uses a room 1/8th of the house, 50% business and 50% private, I would claim 1/16th of rent and heating/power as an allowance, it is highly unlikely this would be objected to.

Mack

Re: Deduction for Rent if Work at Home?
 

You can do this, but it's often not worth your time and effort to do it. It's not for me or my boss - both of us work from home and neither of us do it.

Re: Deduction for Rent if Work at Home?
 

i thought rent was like 50$/mo in thailand, whats the big deal?

Re: Deduction for Rent if Work at Home?
 

Well i don't know if you are self employed or just an employee, also obviously how valuable your time is would be an issue, that's a fair point, my time isn't worth a great deal (financially), also being an accountant I can sort this out myself, so in that respect I have no problems. the actual act of doing the calculation, which I do for most of my clients takes around 5 mins which ends up costing very little and saves them a reasoble amount in taxes.

Mack

Re: Deduction for Rent if Work at Home?
 

I've been told this is a huge red flag for getting audited. Anyone know if this is true or urban legend?

Re: Deduction for Rent if Work at Home?
 

[ QUOTE ]
I've been told this is a huge red flag for getting audited. Anyone know if this is true or urban legend?

[/ QUOTE ]

Seeing as how it's very easy to lie about this and it's very easy to even claim a number you think is correct when in fact is very wrong leads me to believe this is very likely a flag although I have no other proof besides speculation.

Re: Deduction for Rent if Work at Home?
 

Bend over Baby. This is a case where a smart taxpayer skips this legitimate deduction and recoups that loss somewhere else.

Re: Deduction for Rent if Work at Home?
 

fifteen years ago, it was a big red flag, but in the days of internet home businesses for almost everyone, i doubt IRS cares as much.

Has anyone who is really a tax accountatn ever considered the fact that many players are "on call" 24 hours a day as affiliate managers or even as players if a fish shows up. Does this do anything to make it easier to claim the deduction?

it has always made me angry that "big business" gets to deduct very expensive space and very high price items, but businesses that are actually trying to make a profit get taxed to the max.

Re: Deduction for Rent if Work at Home?
 

It is abused regularly by people with poor risk management skills, so this is a distinct possibility, I am from the UK and things are much different here, the IRS and the Inland Revenue are very differently run organisations.

Mack

Re: Deduction for Rent if Work at Home?
 

My accountant told me it is almost never worth trying to claim this because the risk of being audited is too high. Theres a lot of time involved when you get audited too, its not just bad if your not on the up and up.

Re: Deduction for Rent if Work at Home?
 

[ QUOTE ]
My accountant told me it is almost never worth trying to claim this because the risk of being audited is too high. Theres a lot of time involved when you get audited too, its not just bad if your not on the up and up.

[/ QUOTE ]

Is it really conceivable that the IRS would bother going to Thailand, where I understand KKF lives, just to measure the computer area in his studio apartment in order to stop him from deducting at most a few thousand dollars per year?

Re: Deduction for Rent if Work at Home?
 

[ QUOTE ]
[ QUOTE ]
My accountant told me it is almost never worth trying to claim this because the risk of being audited is too high. Theres a lot of time involved when you get audited too, its not just bad if your not on the up and up.

[/ QUOTE ]

Is it really conceivable that the IRS would bother going to Thailand, where I understand KKF lives, just to measure the computer area in his studio apartment in order to stop him from deducting at most a few thousand dollars per year?

[/ QUOTE ]

No, they probably send the local CIA operatives in for him, they'll gas him and kidnap him, and he'll wake up 4 days later by the roadside in Berlin wondering why his arse is sore.

Mack

Re: Deduction for Rent if Work at Home?
 

What if you have a 2 bedroom apartment, and one bedroom is just the office where you play online poker, can you deduct let's say the s. feet of the office from your monthly rent?

so if you pay 3000 a month for 1000 sq. ft apartment, and your office is 300, you take 1000 off?

Re: Deduction for Rent if Work at Home?
 

"Has anyone who is really a tax accountatn ever considered the fact that many players are "on call" 24 hours a day as affiliate managers or even as players if a fish shows up. Does this do anything to make it easier to claim the deduction?"

No, you have no idea what one must do to take this deduction. Being 'on call' has nothing to do with it.

The one person I know who took this deduction got interviewed, not audited, but the IRS did make adjustments to their return which had a negative impact on their overall return. I have only advised one person to take this deduction (I generally do not prepare taxes)since he has a 300lb printing press set up in his loft and even holds revenue generating classes in his loft. That should give you a better understanding of the home office deduction.

Re: Deduction for Rent if Work at Home?
 

I've had a home office for 20 years - never been audited. Business use of your home is legit. Don't be a wuss, take every deduction that is offered. I knock a huge chunk of my income off by taking all of the deductions I am entitled to.

I use turbo tax software for my taxes, with regard to the home office, they compute the size of the office compared to your total square footage of your home (or apartment) and you get a deduction based on that percentage of your mortgage or rent.

For example, 2500 square foot home, 200 square foot office, 8% of total size.

Dogmeat [img]/images/graemlins/spade.gif[/img]

Re: Deduction for Rent if Work at Home?
 

Having a 200 sq ft office in your home is much different than having a computer and chair in your studio as the 'exclusive' test would be much harder to pass in a studio.