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Posted by Arthur Kamlet on December 16, 2006, 8:58 pm
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>> im a computer programmer. in march of 2006 i became a 1099
>> independant contractor and moved cross-country (to new
>> orleans!) for a client; in november i became a single-member
>> LLC (disregarded entity to the IRS; filing as a sole prop).
>> i have two clients, one that i work for from home, the other
>> that i work for onsite. my home is a house i bought after
>> arriving here.
>>
>> i use quicken for my income & expenses, which is pretty
>> straight-forward. i plan to hire an accountant for an hour
>> or two, but i wanted to do some research first before going
>> in.
>>
>> im mainly curious about expenses. i save all of my
>> business-related reciepts and log them -- gas & car costs,
>> work meals, office supplies, etc. i believe i understand how
>> they work.
>>
>> but what im not clear on, is if and how much i can expense:
>>
>> - monthly cell phone
>> - monthly internet
>> - monthly mortage (note + interest + insurance + taxs)
>> - monthly utilities (elec, water, security)
>> - home repairs
Both you and Paul seem to have left out Depreciation
Expense.
If you do claim Home Office Deduction, when you sell this
property you will have to recapture the allowed or allowable
depreciation, so best to take it now if you have an ofice in
the home. See Pub 587.
>> ...all of which are used for personal use as well. my
>> home-office is only 1/4 of my study, which is about 1/6 of
>> my house. my home-office's two computers are also for
>> personal use when im not working. this is my confusion -- it
>> seemed from the IRS site that a home-office must be used
>> *only* for work, not for personal, in order to claim it.
>> which seemed odd to me...
>>
>> can anyone give me a primer, tips, etc?
> Actually, if your home office is used for personal use, you
> can't claim the home office deductions. And while that may
> seem odd to you, the folks elected by people like you and me
> (commonly known as Congress) came up with that.
>
> If you have a qualifying home office (used regularly and
> *exclusively* for business) then 1/6th of the common
> household expenses, utilities (power, water, gas, security,
> and the internet), home repairs, home insurance, the
> mortgage interest (but not the principal amount), and
> property taxes can be taken against your business income.
> Your cell phone you'll have to take a prorated amount based
> on your usage of business calls -v- personal calls, and yes,
> the IRS will make you get detailed bills from the phone
> company to prove it out if you don't keep records).
>
> If I were you, I'd find some way to pull your personal
> computer into another location so the office space
> qualifies.
>
> You'll also find that you may not have a good grasp on some
> of the other expenses. While most are cut and dry,
> deductions for your vehicle usage, meals and entertainment,
> and purchases of equipment and furniture are quite another
> matter, as they carry significantly different rules for
> deductibility and documentation.
__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
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