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As someone who has run his business out of his home for twenty years and has a CPA for a wife, I wouldn't do it. Too many complications, too many ways to get dinged.
According to her? Way too complicated for not enough gain. Plus it jacks up your chance of an audit dramatically.
Are you sure she isn't referring to claiming the home business deduction in the first place, rather than carrying forward a loss? Because if the first one doesn't trigger an audit (it hasn't in the 25 years I've used it, most years) then I don't see any reason why the latter would. That might look fishy for a newer home business but mine has been around a long time.
Are you sure she isn't referring to claiming the home business deduction in the first place, rather than carrying forward a loss? Because if the first one doesn't trigger an audit (it hasn't in the 25 years I've used it, most years) then I don't see any reason why the latter would. That might look fishy for a newer home business but mine has been around a long time.
I've been running a biz for 20 years. For example, if you're taking the home office deduction and work out of a separate structure (Such as a garage or, in my case, a guest house) and you sell your home, then the sale has to be treated as the sale of two properties with the home office portion of the sale reported on form 4797. Since we've moved twice during that twenty-year period, and likely have one more sale before we hang it up, it's simply not worth the hassle. There are other ways to enjoy tax deductions.
I've been running a biz for 20 years. For example, if you're taking the home office deduction and work out of a separate structure (Such as a garage or, in my case, a guest house) and you sell your home, then the sale has to be treated as the sale of two properties with the home office portion of the sale reported on form 4797. Since we've moved twice during that twenty-year period, and likely have one more sale before we hang it up, it's simply not worth the hassle. There are other ways to enjoy tax deductions.
Well it works best that way for you but I don't think you can make blanket statements about it not being worth it for others. I don't have a separate building and I don't plan on selling in the next few years and I think its worth it for me.
The only question I have is whether its worth it to carry the loss from this year forward, and I haven't looked into that.
This is a great, current article. I had a home office for 25 years but only took the deduction during the years I rented. I did not take it when we were homeowners.
It seems many people avoid the home office deduction because of what it might cost them later, so they sacrifice the savings it offers them now. I honestly don't know what works out best for me in the long run, because I don't know what the long run will bring. If I die tomorrow, taking the deduction was a pretty good idea. Also since I use the simplified method, my understanding is that it wont affect capital gains taxes when I sell. But every time I think I know something about tax code I find out there's some other thing i didn't know that puts conditions on what I thought I did know. I'm too busy making a meager living to be a tax expert, and my living is too meager to afford my own tax expert.
If only the IRS maintained an on-line presence replete with both high-level summaries and detailed instructions.
They could call it a "web site."
Maybe you should suggest it to them.
And its called a discussion forum for a reason.
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