When you run a business from your home, your work area is subject to costs such as utilities, home maintenance, mortgage interest, and property taxes. You can report these expenses as a deduction when you file your taxes.
How much of my home office can I deduct?
The simplified version If your home office is 300 square feet or less and you opt to take the simplified deduction, the IRS gives you a deduction of $5 per square foot of your home that is used for business, up to a maximum of $1,500 for a 300-square-foot space.
How much can I deduct for utilities on my tax return?
When Dwight prepares his tax return he could deduct $1,600 ($8,000 x 20%) of home office utility expenses on Form 8829, then on line 30 of his Schedule C. Note that if he instead used the simplified method to deduct his home office expenses utility costs would be included in the $5 per square foot standard rate.
Where do utilities go on a business tax return?
Business tax returns go under the “other deductions” line item on the face of the tax return. Only utility expenses you incur for your business offices and buildings are deductible. If you’re a sole proprietor and you work from home, you may be able to deduct a portion of your utilities with the home office deduction.
Can you deduct utilities when you rent a space?
If you rent a workspace space or take the home office deduction you can deduct the portion of your utilities directly related to your business or rental activities. Note however that any utilities included in your rent should not be deducted a second time as a utility expense.
How are utilities taxed in the United States?
Utility taxes are determined at the state, county or city level. Some states, counties and cities levy a utility tax on residents. It typically covers telecommunication services, electricity, gas, trash and water services. It may be a flat tax, or it may be based on the resident’s usage.
