I’m a fairly new business owner trying to figure out what I can write off and what I can’t. Specifically my mortgage, electric and stuff like that. The business is under my home address but my husband does all the labor in the field. I’ve gotten mixed opinions on paying the mortgage from the business account for tax purposes. What does everyone else do? Tia! I don’t want to do something I’ll regret later.

  • SafetyMan35@alien.topBEnglish
    1·
    10 months ago

    https://www.irs.gov/businesses/small-businesses-self-employed/simplified-option-for-home-office-deduction

    Generally speaking, to take advantage of the home office deduction, the space needs to be used exclusively for business. Setting up a desk in a spare bedroom with a bed in it wouldn’t qualify you to claim the entire bedroom, but you could claim the space your desk occupies if the desk wasn’t used for personal use.

  • jayc428@alien.topBEnglish
    1·
    10 months ago

    You really shouldn’t be getting mixed opinions on this, it’s pretty straight forward. Be very careful about paying personal expenses with the company. You can use company dollars all you like but they’re not a deductible cost (aka a write off), you still pay taxes on those dollars you’re using. Like you can’t pay 100% of your mortgage using the business and have it be a write off. If you use 10% of the house for exclusive business use then you pay all of the mortgage payment out of the business, but you can only book 10% as a deductible cost to the business, and the other 90% you’re booking as a distribution that you’re taking from the business. That 90% you will pay income taxes on.

    IRS guidelines on home office write offs:

    https://www.irs.gov/newsroom/heres-what-taxpayers-need-to-know-about-the-home-office-deduction#:~:text=Therefore%2C someone who conducts business outside of their,be the taxpayer's principal place of business.

    Form: 8829 is what you would fill out. https://www.irs.gov/pub/irs-pdf/i8829.pdf

    Typically $5 a SF of the exclusive space used for the business to a max of 300 SF. If not using this method, it’s percentage of the house used for the business.

    When in doubt ask a CPA, don’t do your own taxes as a business, too many pitfalls in my opinion.

  • Acceptable_Piano4809@alien.topBEnglish
    1·
    10 months ago

    It does sound like you can take a deduction for a home office if you do this the correct way, but you need to research it more… you need to legitimately set up a home office space and use it as such… you cannot pay your mortgage out of the business account, but can pay some of it, a reasonable amount if you use your home for such purposes