You may be able to deduct the costs of maintaining an office at home, if you’re self-employed in Maine as a sole proprietor, partner, or LLC member.
But before you start jumping for joy, it’s important to note that in order to claim a business deduction for an office inside your home, you must use the space exclusively as your principal place of business, or as a place to meet with patients, clients or customers.
Current tax law gives you several ways to qualify for a home office write-off. Assuming you’re eligible, here’s the payoff:
- You can deduct 100 percent of any expenses that are directly related to your home office, such as an additional phone line.
- You can deduct a percentage of indirect expenses that relate to your entire residence, such as mortgage interest and property taxes.
However, taxpayers storing business inventory or product samples, or qualified daycare providers, will fall under special rules.
If you are a sole proprietor or single-member LLC owner, your home office deductions would go on a Schedule C. If you are a partner or member of a multi-member LLC, your deductions would go on a Schedule E. Write-offs that appear on these business schedules are double tax savers, because they reduce both your income and self-employment tax bills.
As always, there are some restrictions on home offices, and different rules apply if you are an employee. If you have more questions, feel free to give us a call here at Filler & Associates, and we can fill you in on some of the recordkeeping requirements.