7
OFFICE IN HOME
Wherever you wander, there’s no place like home.
—SONG LYRICS BY JOHN HOWARD PAYNE
The Song Is Right! Let’s Stay Home
In 2012, the latest year for which IRS statistics are published,1 more than 32,783,232 business returns were filed, reporting over $35 trillion in sales. Of these businesses, over 23 million were “nonfarm sole proprietorships.” In other words, they were businesses like yours and mine. Businesses like ours produced $1,301,569,749 in revenues for this country—that’s over $1.3 trillion! In total, those small businesses also reported a little more than $1 trillion in expenses. Although the IRS tracks information on various forms, there are no 2012 statistics for “office in home.”2 Perhaps people are so afraid of the red flag it represents that they have cut back on using Form 8829, the office-in-home deduction.
For a new business, having your office at home is an excellent idea because it keeps your overhead low. You can get away with earning less, so you can concentrate on building the business instead of paying the bills. Not only do you save money on renting an office space, but you also save precious time by not having the distractions and office politics of a shared suite.
For me, moving out of the penthouse suite on Ventura Boulevard meant a savings in tangible dollars of more than $1,000 per month. I no longer paid rent, additional annual common-area costs, parking for staff and myself, parking validations for clients, tips to the valets, or utilities. I saved at least another $1,000 per month in my staff’s increased productivity because they didn’t have all the distractions that came with managing a suite with several tenants. Many tenants had too much free time and liked to hang around chatting with my charming staff.
Another advantage to working from home is that when your family needs you, you’re there. Once all the interruptions end, or the family time is over, you can slip back into your office, perhaps late at night, without having to dress up and drive across town. You can step in for just a minute, even on days off, to take care of something quickly and conveniently.
Besides, you can take expenditures you’re already making and use them to help reduce your business profit and the related self-employment taxes. Which expenses do double duty like this? Your rent. Or if you own a home, your mortgage and property taxes. You’re already paying those bills, right? With an office in the home, a percentage of those costs will move to your Schedule C.
Of course, working at home may have some drawbacks.
It’s a Red Flag; It’s Just Asking for an Audit
Sure it’s a red flag! So what? If you are operating a real business out of your house, shouldn’t you be entitled to take legitimate deductions for it? True, having an office-in-home deduction and using Form 8829 will definitely increase your chances of an audit. But if you keep good records, you have nothing to worry about. You’ll need to be able to prove exactly what part of your home you used for business. It’s also important to define what the business use was for each area you’re claiming as business space. But with the instructions that follow, you’ll be able to prove to the IRS that you’re entitled to the deduction. And if you’re ever audited again, you’ll have proof that the IRS accepted your evidence in the past.
Why does having a home office seem risky to many small businesses? Here’s the background on the issue. It relates to the Pomarantz case3 and the Soliman case.4
Until 1998, the IRS knew an office-in-home audit was one easy way to generate money for Uncle Sam’s coffers.
Why? Until the end of 1998, the rules for in-home offices were dictated by the results of a court ruling against Dr. Pomarantz. He was a physician whose work took place in a hospital. But he did have a legitimate office at home where he took care of all his business transactions, planning, and calling and where he maintained his records. Since he didn’t meet with patients at home, under a strict definition of the tax code, he was not permitted a deduction for an office at home.
Pathetic, isn’t it?
The same treatment applied to such people as plumbers (they didn’t fix their customers’ pipes by bringing them to their own home and working on them there), Laundromat owners, traveling salespeople (a whole other problem), actors, and . . . you’re getting the idea.
Looking at these businesses’ returns, odds were in the IRS’s favor to score some good money by auditing office-in-home returns. But no more.
Under the rules that took effect as of January 1, 1999 (based on a law that passed two years earlier . . . why it took so long to take effect, I have no idea!), you no longer have to meet customers in your home to qualify for the office-in-home deduction.
IRS Publication 587 outlines the present requirements:
1. Your use of the business part of your home must be:
a. Exclusive
b. Regular
c. For your trade or business
and
2. The business part of your home must be one of the following:
a. Your principal place of business
b. A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business
or
c. A separate structure (not attached to your home) you use in connection with your trade or business
That little item you see in 2a opened up the door to you if your office in home is only used for administrative purposes, even if you generally work at customers’ locations. But this must be the only business office you have. The office in home doesn’t have to be a whole room; it may be part of a room. It doesn’t have to be just a room; it may also include closet space, garage space, carport, or parking pad for your primary business vehicle or tools (tractors, cement mixers, clown cars, drill presses, whatever you use or store).
Under the present rules, pretty much everyone who operates a business from home will have a legitimate claim to an office in the home. Since 1999, the odds of the IRS finding fault with the office-in-home deduction on a tax return have decreased dramatically.
Oh, there’s no doubt that many people who are taking the deduction are not really entitled to it. But it’s no longer a sure thing that you’ll get audited. These days, to get the IRS’s attention, you need to have both an office in home and a loss on Schedule C. (See Chapters 5 and 6.)
Another Attractive Change to the Law Affecting Homeowners Only
Before May 6, 1990, there was a consideration even more daunting than IRS audits for people who planned to sell their homes within a few years. You would lose the $250,000 ($500,000 for couples) personal residence exclusion on the business portion of your home. As a result, when you had a large gain on the sale, you would have to pay tax on the business percentage of that gain. For instance, let’s say you used 15 percent of your home as your office. Your home was worth $200,000, but you bought it for $100,000 several years ago. In the past, when you sold the house, $170,000 would have been treated as sale of your personal residence. The gain would not have been taxable since it’s less than the $250,000 exclusion per person. But $30,000 ($200,000 × 15 percent) would have been treated as the sale of business property. Without going through all the numbers, essentially, you would have had to pay $3,000 to $5,000 in IRS and state taxes on the sale, depending on how much depreciation you had taken.
That additional tax is no longer an issue. Under the present law, you get to treat the whole house as your personal residence when you sell it. You only have to pay tax on the depreciation you’ve deducted. Since most people don’t get to deduct more than $500 per year of depreciation, the tax doesn’t usually amount to much. (See http://iTaxMama.com/Sale_Home_Ofc.)
New computation complexities have arisen as a result of the Housing and Economic Recovery Act of 2008. They affect second homes used as rentals. They won’t affect your office in home. So relax. It’s all right to use office-in-home deductions if they apply to your business.
Simplify, Simplify
In 2013 the IRS came up with a new twist on the home office deduction. Believe it or not, it made it easier for you. You have the option of deducting $5 per square foot times up to 300 square feet of home office space, instead of going through most of the complex steps I am about to present to you. Although this only gives you a maximum deduction of $1,500 if you use 300 square feet or more to work in, it has a lot of benefits.
• You don’t have to take depreciation on your home.
º Which means you don’t have to pay tax on the depreciation deduction when you sell the house.
º However, you still have to pay tax on the depreciation deductions you took before switching to the simplified method.
• You get your full mortgage interest and property tax deductions on Schedule A. Before, you moved part of that to your office-in-home schedule.
• You don’t need to keep records on all your utilities, insurance, and other expenses for business purposes, since you won’t be using them.
• Best of all, you reduce your audit risk.
There are quite a few drawbacks to this arrangement, too. The worst is for you folks who haven’t been able to use all your home office deductions in the past. You’ve been carrying those deductions forward into a year when you expect to show a sizable profit. And you know that year is coming, right? Well, when you switch to the simplified method, you lose all those unused deductions. You’re saying, “Aw, what the heck! It’s been a pain to keep track of all those records anyway. What do I have to lose?”
That’s what I thought, too. At the end of this chapter, read the story about Erica. That will help you understand why you might not want to give up those carryforwards. Figure out how much you really will lose by being too lazy to keep records on the allowable home office deductions. Hmmm . . . the recordkeeping is suddenly looking more attractive, isn’t it?
Take a look at the pros and cons of the IRS’s new simplified home office deduction versus the detailed deduction in Table 7.1.
TABLE 7.1 Comparison of Methods
Inner Space
If you decide to opt for regular deduction, great. Let’s get into the details. Now that you’re comfortable taking the deduction, just how much of the home’s area can you deduct?
Carefully measure out the square footage of the space(s) you use. You’ll find you use substantially more of your home for business than you realize. After all, most businesspeople use their car for business more than 40 percent of the time. Have you ever noticed how much space your garage takes up? While you may have a 1,400-square-foot home, your two-car garage may add 800 square feet (about 20 feet × 40 feet). If half that garage is used for your 75 percent business-use car—that amounts to 300 square feet (800 × 50 percent × 75 percent). Add in the storage for your files, inventory, tools, and records (about 10 × 20 square feet), and that’s another 200 square feet. You’ve just found 500 square feet in the garage alone!
Look at the space you’re using in the house. You have that area at the back half of the living room. You have a desk (or two to make an L-shape), a bookcase or three, a cabinet for your printer, several upright or lateral files. You’re talking about 12 feet × 15 feet = 180 square feet. Don’t forget the closet filled with office supplies—another 6 feet × 4 feet = 24 square feet. So far we have 704 square feet! (24 + 180 + 500). Dividing that by the total square footage of the house and the garage (1,400 + 800), which is 2,200 square feet, results in a business use of 32 percent of your home. You can use the worksheet in Table 7.2 to help you.
TABLE 7.2 The Home Office Spaces
Just using your unimaginative desk area, you’d have had 180 ÷ 1,400 = 12.9 percent.
As long as the areas you’re taking for the deduction are really used for business, you will have no problem in an audit.
Just remember one thing—you can’t add in space that is not exclusively used for business. If you do your work on the kitchen counter and then clear it all away to make and serve family meals, that’s not office space. On the other hand, if you use the dining room as your office and never use it for family meals—that is office space.
Isn’t this exciting?
Two Critical Reminders
Let’s pause for just a second here. Please do be careful about two things when claiming this deduction.
1. You really do have a business with a profit motive.
2. You really are using your home as your principal place of business.
While the IRS isn’t chasing after office-in-home deductions per se, it is looking for fraud. So please don’t be frivolous about this because the IRS really doesn’t have a sense of humor in this area.
Incidentally, having gone through this exercise to see how much of your home you’re using for business may get you to do some thinking about your business space. Is there really enough space to run your business the way you’d like? Would you be better off in a traditional business facility? Or would you be better off in a bigger house? Perhaps, looking all this over will help you realize not only that you need more space but also that your business can afford to pay for it.
Prove It, Baby!
OK, you’re comfortable using the home office. You’ve learned how to determine how much of the home is a business. Now, how do we prove it to the IRS in the event of an audit?
After all, if the IRS does audit you, it will be about two or three years after the year you used the area. You might have remodeled that area by now—or moved away. How do you protect your deduction? Simple: take photographs. Take lots of pictures of the office spaces in the house and remember to include the closets and storage areas. Take photos of the garage area and any business space out there.
I know you love your digital camera. It makes life so easy. But print those snapshots. Keep a hard copy in your permanent file for the house and another copy in your tax file. Who knows if you’ll still be able to read the same digital medium in 2020?
Make a schematic drawing of the home. It doesn’t need to be fancy. Just make an outline of the house, garage, and storage areas, putting lines in to separate each room. (Remember those old-fashioned things called rulers? They come in really handy for making neat, straight lines. If you don’t have a ruler handy, use the edge of a book or your L.L. Bean catalog.) Write in the lengths and widths of each room. Then add up the total square footage and list it neatly in a corner of the page. Next, identify all the areas you use for business and add up their measurements. Enter the total business square footage on the page. Finally, show the computation of the business percentage (business square feet divided by total square feet). If you’re not comfortable drawing this up yourself, take a look at SmartDraw, https://www.smartdraw.com/floor-plan/house-design-software.htm. Or here’s a resource with five free online room design applications: https://www.thebalance.com/free-online-room-design-applications-1357750.
Do not use the number of rooms used for business divided by the total rooms in the house. It doesn’t work that way. You must use square footage.
Set up a permanent office-in-home file. Put a copy of your photos and this schematic into that file and another copy in your tax file for each year that you operate from this home. That way, in case of an audit, you won’t have to scramble to find a copy.
Now that you have the measurements, what can you deduct?
What Are Office-in-Home Expenses?
Don’t get too carried away here. I’ve seen people drag in everything they spend money on and try to turn it into a business expense. Don’t get greedy. If you don’t have clients coming to your home, don’t deduct things like your gardener, pool guy, or other outside maintenance expense. When it comes to your housekeeper, if you don’t even let her set foot in your office, don’t take that deduction. I’m not trying to spoil your fun—just trying to keep you looking good.
Rent Is Easy
If you don’t own your home, multiply the business percentage (you’ve already computed it) times your total rent. For example, let’s say you pay $12,000 per year for rent plus $500 for renter’s insurance. Earlier, you computed your business use as 32 percent. Your net deduction then is $4,000 (12,500 × 32 percent). That’s it. On Form 8829, use column (b) “Indirect Expenses.” Enter the full $500 of insurance on line 17 and the full $12,000 of rent on line 18. Your software will compute the 32 percent.
If You Own, You Depreciate
Since the home office area is being used for business, you’ll need to use the nonresidential real property tables to look up your depreciation. Business property is depreciated over 39 years. If you can’t get your hands on a depreciation table, just do the computation yourself. There are 468 months in 39 years (12 × 39). Divide your depreciable cost by 468. That gives you the depreciation per month. Then multiply the monthly amount by the number of months you used the space for business this year. For instance, if you started the business in August, you used the home office for five months.
It’s important to figure out the value or cost of your office in home. It’s not quite as easy as it looks. The number might start with your purchase price of the home. Or if the current market value of the home is lower than your purchase price plus improvements, then the lower number is your starting point. That will give you a basis (tax cost) for the home. You can’t depreciate land. To determine the cost of the land, look at your appraisal, if you have a copy. Most professional appraisers include that information. If you’re in the process of buying the home, or refinancing, ask for a copy of the appraisal. Be sure to ask the appraiser to define the land value. You can’t get your hands on an appraisal? Use a copy of your property tax assessor’s statement or annual invoice. It shows land and building value. Don’t use the value shown. Use the percentage (divide the land value by the total value of the property). Apply that percentage to your basis to get the cost of the business portion of your home. Use the worksheet in Table 7.3 for guidance.
TABLE 7.3 Depreciation of Home
Add in any major improvements that weren’t previously depreciated or expensed. Have you ever taken a casualty loss deduction on your home? If you live in a flood, a tornado, or an earthquake zone, you might have. Be sure to reduce your basis by the amount of the casualty losses you deducted. Line (D) in Table 7.3 will give you the adjusted basis. Table 7.4 will guide you on the rest of the depreciation calculation.
Honestly, though, the first time you do this, it’s a good idea to have a tax professional set this up for you. Ask the tax professional to give you all the details and a copy of the depreciation schedule. Once you have that, you can take it from there. It’s well worth the expense for your first year.
TABLE 7.4 Home Office Deduction Overview
There are still more expenses you may take.
Utilities (gas, electric, sewage, trash, water). Rather than using the square-foot method, what I like to do is this:
• Start with your utility bills from before the office was in your home, if you can get your hands on them. Add up a year’s worth. Take the average (divide by 12). That number is your average monthly personal utility charge. Deduct this amount from your present monthly utility total. The difference is your business expense. For instance, before working from home, your electricity bill was $50. Now that you’re working from home, with all the computers and air conditioning, your bill is $150. The $100 increase is your business expense. Do this every year. Keep a copy of these records and computation in your permanent office-in-home file, as well as the file for each tax year.
• If your office was always at home, you’re stuck using the same percentage as your square footage of business use. If you have a way of proving that your home office uses more power or water than is needed for regular living, use it. One way would be to get copies of a neighbor’s utility bills for a year. Even three months would be great. Find someone who works outside of the home, has a similar number of people living in the home, and won’t mind letting you use his or her utility invoices for your audit. Follow the instructions above.
• Generally, doing the calculation this way will result in a higher and more reasonable deduction.
Keep logs for the following expenses! Even the courts are disallowing deductions when you don’t maintain logs.
• Internet access. If your family is using the same lines, you’ll have a hard time justifying the deduction. You might get away with deducting the difference between a lower-speed and a high-speed line, using the logic that you wouldn’t have gotten the high-speed line if not for the business. However, if you are paying a flat fee for all Internet access, and the business doesn’t cost you anything extra—you don’t really have a business deduction, do you?
• Cable TV. To get this deduction, you’ll need to keep a log of the shows watched and which were for business purposes. Keep a notebook outlining how that program related to your business. Deduct only the business use. When I take this deduction, even for my entertainment folks, I know it’s usually a giveaway—one of those things you’re prepared to give up during an audit. But, I have prevailed in audits when my director client did keep detailed records about his viewing and what information he was gleaning from each show he watched.
• Repairs and maintenance. If you repaint or repair any part of your business space, naturally, 100 percent of those costs are deductible. For instance, if you install an additional bathroom just for your office, you can deduct all those expenses. However, if you make repairs or improvements to the whole house, such that it also benefits your business space, you’ll only be able to deduct the business percentage we arrived at earlier. An example of such an improvement would be installing a central air-conditioning system in the whole house.
• Property tax and interest. Deduct the business percentage on Form 8829. Use the rest on Schedule A.
• Insurance. Business liability insurance or business insurance just on your office space is fully deductible. You may use the business percentage of whatever you pay for homeowner’s insurance, earthquake or flood insurance, or renter’s insurance.
• Household supplies. You’ll buy certain things at the supermarket or discount store for household cleaning or beverages or coffee. Some of those things may look like personal groceries. But if you are using them strictly for your clients or staff, they may be business expenses. Think about the expenses from this perspective: If you were in an outside office, you would have a “kitchen” area containing a coffeemaker, microwave, and refrigerator, and you would stock it with coffee, tea, cocoa, popcorn, and other supplies for visitors and staff. Are you doing the same thing at home? At the store, I like to separate out the groceries that are for the office from the ones for the house. The store doesn’t mind ringing it up as two sales. If you keep separate receipts, it’s easier to support your deduction. Better yet, use a business credit card to pay for the business purchases. Be careful not to abuse this.
When You Can’t Use Office-in-Home Deductions
If your business shows a loss, your office-in-home deductions are suspended. Suppose your business shows a profit. Then, when you use the office-in-home expenses, your profit turns into a loss. You may only deduct enough home office expenses to zero out your profit. The unused expenses don’t entirely go away. You carry them forward to next year’s tax return. There’s a line at the bottom of Form 8829 for carryovers. Remember, I told you how valuable these carryovers can actually be—when your business becomes more profitable.
Evaluate Your Options
You understand how to use the office in home. Now, the question arises, should you use it? There may be times when it’s wise to just skip it.
These are some of the considerations I look at for my clients:
• Do you own or rent your home?
• If you own, will you still be living there two years from now?
• How soon do you plan to sell it?
• Will you have a gain or a loss if you sell it?
• Do you expect your business to show a profit after using these deductions?
If you are renting the residence, there are no long-term repercussions from using this deduction.
When you own your home, it has most likely appreciated since you bought it. You will have to pay taxes on the depreciation you’ve taken. Is it worth it for the small amount of depreciation deduction you get anyway? It may be worth using the full-blown office-in-home deduction if all the other office-in-home expenses really help reduce your taxable business profit. You don’t get to use all the other office-in-home expenses without also using the depreciation. The tax code has a special rule about depreciation. It’s called the “allowed or allowable” rule. That means if you should have taken depreciation, but didn’t, the IRS will treat your tax return as if you had. It’s complicated and nasty—and if you were in business for more than three years and didn’t take the depreciation, but should have, it could cost you. This is definitely one of those areas that you want to discuss face-to-face with a good tax professional. Why? Because we have a way to fix this for you.
One of the questions above asks whether your business is profitable. I ask that for two reasons:
1. When your business shows a loss, your office-in-home deduction cannot be used. (Sure, it will carry over to the next year, but it’s useless until then.)
2. If you expect to be showing losses for several years, you may never get the advantage of the office-in-home deduction, but you will attract an audit for a hobby loss. (See Chapter 2.)
Generally, seeing a pattern like that, I avoid the deduction altogether. If you can stand the scrutiny and have a solid business plan that shows how and why your business will start being profitable five years from now, go ahead and use the office- in-home deductions.
Then there are times when you just want to throw out the whole deduction altogether. Which is what I did for one client, until I went all the way. Erica hadn’t filed tax returns for a long time. I prepared seven years’ returns for her, including her office-in-home deduction. It wasn’t that hard because she was renting an apartment. As a self-employed publisher, she worked from home. You can just bet that a substantial portion of her home really was devoted to her business.
Erica had losses for the first six years. She could prove how deeply in the red she was by the very high balances on her credit card and bank loans. Seeing all those losses during the first years’ returns and thinking of the added scrutiny the IRS gives to nonfilers, I went back and removed the office-in-home deduction. (I kept a printed copy of those pages in case I needed them again.)
Good thing, too. When I prepared the last year, she had $50,000 worth of profits. Suddenly, all those years with losses became very attractive. Putting the office-in-home deduction back in and carrying it forward each year wiped out most of Erica’s $50,000 profit, including her self-employment taxes, saving her thousands of dollars in taxes. In the end, Erica only owed a few hundred dollars for all seven years. (I love it when I can see the future like this, don’t you?)
When I first removed the Form 8829, it was because she already had such high losses that it was clear her net operating losses (NOLs) would wipe out income for years to come. The trouble with NOLs is that they don’t wipe out self-employment taxes. The self-employment tax is 15.3 percent of your business’s current-year profit. Some people don’t mind paying that money because it goes into their own Social Security and Medicare coverage. Others are so broke or operating on such a tight budget that they can’t look toward the future—only to keeping the lights on. The problem with this short-sighted view is, when you are ready to retire but you haven’t built up investments or savings, your Social Security benefits will be $300 or less. What will you live on? (I’ve listened to many people in frightening situations like this who wish they had done things differently earlier.) So, please, try to plan and budget to build up savings and Social Security benefits.
Working on this series of tax returns for Erica helped remind me that NOLs only have a limited use. It was also a defining moment for me. Preparing Erica’s tax returns was how I came to understand that the office-in-home carryforwards are one of the few deductions that will reduce self-employment tax.
All the reading and education in the world doesn’t help. You’ve got to go hands-on to understand the tax system.
A Final Note—and a Final Story
Working at home can be really grand. You are free to indulge yourself when you simply need a break. You can spend time with friends, children, and lovers. Or you can be interrupted constantly. How you separate work space and time from personal space and time is strictly up to you. But you will reduce your stress levels if you establish specific boundaries for your family, friends, and clients—and stick with them. When you work at home, people tend to treat you as if you’re not really working. Or they will call you to service them at all hours of the day or night.
Personally, I set time boundaries. TaxMama’s telephone hours are Monday through Thursday, from 8 a.m. to noon. Outside of those hours, even if I am here, I will rarely ever pick up the phone. That is my time to write or to get other work done, without interruptions—or to give myself some me time. We all need time that we control. So remember, budget time for your own relaxation. Whether it’s five minutes of meditation each hour or a half-hour nap each afternoon or a once-a-week bubble bath, you need time to recharge yourself. Or you will collapse.
Alex’s Productivity Hat
Alex Mandossian is best known for his TeleSeminar Secrets course, which is, naturally, a course conducted as a teleseminar. Mandossian works from home, surrounded by a young, bright, inquisitive, and active family. How does he get anything done with small children around? He turns it into a game. When Alex is wearing his Productivity Hat, he can work unmolested. Alex can even wander into the kitchen to pick up a sandwich or go out to the yard. His children might come running to him, then stop. They see Daddy’s Productivity Hat, put their fingers over their lips, and tell themselves to shhh . . . Daddy’s working. Try your own version of a Productivity Hat or scarf or sock or sash, . . . or whatever turns you on. It really works.
Office-in-Home Resources
You can get some help and support with the issues you’re facing from an assortment of online resources. Many have articles and tools to help. Some also have forums where you’ll find it a relief to talk to other people dealing with the same issues as you.
IRS Forms
• Form 8829, Expenses for Business Use of Your Home. https://www.irs.gov/pub/irs-pdf/f8829.pdf.
• IRS Publication 587, Business Use of Your Home. https://www.irs.gov/publications/p587/index.html.
Books
• The Home Daycare Complete Recordkeeping System by Brigitte A. Thompson. http://iTaxMama.com/DayCare1. This book contains 24 reproducible worksheets in the book including mileage logs, inventory sheets, income and expense statements, and computer logs.
• Family Child Care Record-Keeping Guide, ninth edition (Redleaf Business Series) by Tom Copeland, JD. Lots of information on how to run a daycare business. http://iTaxMama.com/DayCare2.
• Deduct Everything! by Eva Rosenberg, http://deducteverythingbook.com/. In addition to over 250 tips, there’s great information about how to earn money from home.
Online Support for Home-Based Businesses
• SoCal Mom by Donna Schwartz Mills. http://www.socalmom.net. Articles, e-books, tools.
• Work at Home Moms by Cheryl Demas. http://www.wahm.com. Resources, tools, message boards, a way to find local moms. There’s also a forum for work-at-home dads at http://stayathomedads.about.com.
• WomanOwned.com by Christina Blenk. http://www.womanowned.com. Articles, resources, forum, networking.
• Alex Mandossian’s TeleSeminar Secrets. http://iTaxMama.com/Mandossian. Eye-opening information about how to run your business from home, with sensible and practical ways to turn your own education and expertise into a variety of online or tangible products.
• TaxMama’s Quick Look-Ups. http://iTaxMama.com/TM_QuickLookUp. You will find all kinds of useful reference materials, webinars you can replay, e-books, and more.
• Your Business Bible. http://www.yourbusinessbible.com. Look for worksheets, printable checklists, and other goodies and resources.
1 Table 1, “Number of Businesses, Business Receipts, Net Income, and Deficit,” for 1980 to 2012, https://www.irs.gov/pub/irs-soi/12otidb1.xls.
2 See, no Form 8829 is listed—https://www.irs.gov/uac/soi-tax-stats-statistics-by-form.
3 The Ninth Circuit Court concluded that an emergency care physician’s home office was not his “principal place of business” under §280A. See Pomarantz v. Commissioner, 867 F.2d 495 (9th Cir. 1988). The Ninth Circuit ruled that Pomarantz could not deduct home office expenses because he consistently spent more time on duty at the hospital than he did at home. The essence of his profession was the hands-on treatment of patients, which he did only at the hospital and never at home. Finally, he generated income only by seeing patients at the hospital, not by studying or writing at home.
4 Commissioner v. Soliman, 506 US 168—Supreme Court 1993. In this case, an anesthesiologist spent 30 to 35 hours per week working in the hospital. He performed his billing, management, and administrative functions at home. The U.S. Tax Court supported him. So did the Fourth Circuit Court of Appeals. The IRS took the case to the Supreme Court, which supported the IRS—there was no office at home since Dr. Soliman derived his income from the practice of anesthesiology.