Core Financial Resources
Core Financial Resources

Sign In

Avantax
Qount
Xero
Cadence HCM
Elements
July Services
Bill AR / AP
Bill Spend & Expense
Ramp

Your home office's real superpower

Vehicle Tax

2 min read

Many small business owners don’t take the home office deduction seriously. It’s easy to understand why. Home offices are a very difficult deduction to qualify for. Add to that, timid taxpayers have been warned against claiming a home office for decades, threatened with certain audit. Three things have changed since this red flag warning was first issued.

  1. Tax Court approved the deduction.
  2. Al Gore invented the internet. ;)
  3. Covid-19

Even if you get over the red flag concerns, you may wonder if it’s worth it. Consider this:

First, any home office must be used regularly and exclusively for business. That’s right exclusively. No, your kids may not do their homework in your home office. Furthermore, the office must qualify as a principal place of business. This is serious red tape!

Second, recordkeeping is substantial. You must keep up with (and have available upon audit) utility bills, insurance payments, property taxes, mortgage interest, home depreciation, and direct costs all year long.

Finally, if you get this far, once you do the math you may find that all this effort only put a few hundred dollars in your pocket. A few hundred dollars is a few hundred dollars for sure – but for all that effort you may well wish it was more.

WHY TAKE IT SERIOUSLY?

Many small business owners see all this red tape and are too quick to dismiss the value of this deduction. The true value of the home office – it’s real superpower – is that it changes your commute. “My commute?” you ask. Yes – your commute.

You see, communing miles are never deductible. This means when you travel from home to your main place of business you may not deduct the cost of transportation. Yep, all those miles go right out the window. Think of what this could mean.

If you live 15 miles from the office this could mean losing a $4,350 deduction.
(58 cents per mile x 15 miles x 2 times a day x 5 days a week x 50 weeks a year)

If you establish and maintain a home office, your home becomes a place of business. Since travel between places of business are always deductible you would qualify to deduct the $4,350 in travel expenses. In many cases this travel deduction is triple the raw home office deduction.

Don’t give up on the home office. Its real superpower is turbo charging your vehicle expenses.

Notice: This generic information is not intended to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary (by industry, entity type, and locale), consult your accountant, lawyer, and/or HR expert for specific guidance.
Scott Patterson

Scott Patterson

Author

Share this page via

It only takes 10 minutes to see if we’re a good fit.

In just ten minutes you can see if it makes sense for us to work together. No pressure, no sales tactics. Tell us about what’s working and not working for you. If we can help, we’ll schedule another time to go deeper with you.

Schedule "Good Fit" Call

Related Articles

Keep reading. Never stop learning.

Vehicle Tax

Don’t wreck your most valuable deduction

Uncle Sam's allowance for vehicle expenses is one of the least understood deductions. Of course car and truck expenses are allowable, but how are they maximized? What records are necessary to survive an audit?

Scott Patterson Scott Patterson

Scott Patterson

3 min read

Vehicle Fundamentals Tax

Fundamentals: Vehicle Expenses

Vehicle expenses are one of the least understood and poorly documented deductions on most tax returns. Yet it is the biggest deduction for many small business owners. It is also the one that can get you in the most trouble...

Scott Patterson Scott Patterson

Scott Patterson

4 min read
Core Financial Resources
Facebook
LinkedIn
Twitter
Anderson
1510 N Main St
Anderson, SC 29621
(864) 224-8929
Greenville
3449 Pelham Rd. Suite A
Greenville, SC 29615
(864) 626-5353
Seneca
103 Mountain View Dr
Seneca, SC 29672
(864) 882-1090

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Check the background of your financial professional on FINRA's BrokerCheck Avantax affiliated advisors may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment Services℠, Member FINRA, SIPC, Investment Advisory services offered through Avantax Advisory Services℠,Insurance services offered through an Avantax affiliated insurance agency. 3200 Olympus Blvd., Suite 100 Dallas, TX 75019 972-870-6000.

The Avantax family of companies exclusively provide financial products and services through its financial representatives. Although Avantax Wealth Management℠ does not provide or supervise tax or accounting services, Avantax Representatives may offer these services through their independent outside business. Content, links, and some material within this website may have been created by a third party for use by an Avantax affiliated representative. This content is for educational and informational purposes only and does not represent the views and opinions of Avantax Wealth Management℠ or its subsidiaries. Avantax Wealth Management℠ is not responsible for and does not control, adopt, or endorse any content contained on any third party website.

This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Investments & Insurance Products: Are not insured by the FDIC or any federal government agency- Are not deposits of or guaranteed by the bank or any bank affiliate- May lose Value

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Indexes discussed are unmanaged and you cannot directly invest into an index. Past performance is not a guarantee of future results.

Links provided from this web-site are strictly for informational purposes and are not an endorsement or recommendation of the site, company, content, or its sponsoring organization by Avantax or its affiliates. Firm Name provides these links as a convenience to you, and has not tested any software or verified any information found at such sites. Risks are associated with the use of software and the information available on the Internet and you acknowledge and understand these risks before using any of these services.

Avantax Investment Services℠ and Avantax Advisory Services℠ are not affiliated with Wymer Brownlee Wealth Strategies.

Copyright © 2024 Core Financial Resources.