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Working From Home May Provide Tax Benefits

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Working from home a few days a week or even full time has become a more popular option and benefit offered by employers.  Not only does it allow for flexibility in the work day, it can help save money normally spent on commuting costs, eating out, and wardrobe purchases, to name a few.  Another cost saving measure can come in the form of a tax write off, the Home Office Tax Deduction.

According to an article written by Margaret Heidenry published by realtor.com, “the home office deduction allows you to write off part of your home expenses on your business tax return by separating out the costs associated with using your home for personal purposes (making pancakes) and business (answering work email).”  It is important to understand, however, if your work from home situation actually qualifies for a home office write off.

First off, the “home office” has to be an area of your home used solely for the purpose of conducting the work associated with the business.  It cannot be used for any other functions unrelated to the employee’s work and still qualify for the deduction.  It is also required that the work from home arrangement be in place in order to provide convenience to the employer, not simply a preference of the employee.  An example of this would be if the employer did not have a physical office space for the employee to work from.  If these qualifications are met, claiming the home office on your taxes can be completed via a couple different methods detailed by Heidenry’s article.

Read the entire article.

 

Photo Credit:  Louis Hall

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Are You Sure Your Mortgage Interest Is Tax Deductible?

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As you prepare your taxes this year, you may or may not notice a re-designed form 1098, the form used to report the amount you paid in mortgage interest for the tax year.  Although there have not been any changes made to the mortgage interest deduction regulations in several years, in 2015 the U.S. Congress did pass new rules with regard to how mortgage interest is reported.  The form now requires more details to ensure homeowners’ properties and mortgages indeed qualify.

According to an article published by Kiplinger, titled Mortgage Interest Tax Deductions May Get Extra Scrutiny This Year, “The new form will include the mortgage origination date, the balance at the end of last year and the address of the property securing the loan, as well as other information useful to the IRS.”  As a result, we could see the IRS perform more audits that specifically focus on mortgage interest.

Therefore, it is important for homeowners to have a clear understanding of what properties qualify for mortgage interest deductions as well as how much and what kind of debt falls within the IRS guidelines before filing your taxes this year.

The Kiplinger article provides specific details and helpful examples, click here to read the entire article.

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