Debating changing jobs and this will play a part in my decision!

Yes, but it has to be for the exclusive purpose of your employer. It would be good to get that in writing that they require you to maintain your own office.

The write off depends on the percentage of your home that is dedicated to the business.

I am not an accountant but I looked into this very same issue.

The operative phrase is "Regularly and exclusively used for business." Keep scrupulous records.

I see. I am a software developer and will essentially use my second bedroom solely as an office where I will do work for my employer. I have read the appropriate IRS publications, and they are incomprehensible. It says a lot for our tax code and the need for a simple, flat tax when someone with a good sized IQ can't figure out what the hell the rules are!

There are no experts. The tax code is a moving target. ;-)

yes... 2+2=22

Yes. The important part is to get everything down in writing, and to have it confirmed by the company you are working for. It should state explicitly that you are a full-time employee, and that they don't provide you with office space despite the fact that you need it to do your work.

I am no expert on taxes but we employee a software developer with a very similar arrangement.

But will you also FReep from there? Play solitaire? - have to account for that time!!!

Right. That deduction is a big red flag to an auditor. Your kitchen table is right out, as is space in your bedroom or living room. And if there's a computer in this space and it is discovered that computer is used for personal reasons other than pure business, then the deduction could be disallowed.

Moreover, if you are ever audited, immediately obtain the services of an attorney who is intimate with tax law. At an audit, you absolutely do not respond directly to anything coming from the auditor. The auditor talks to your attorney, who talks to you. You respond to your attorney, who in turn relays your answers or documentation to the auditor. Also make sure that no original documents are retained by an auditor.

I think I heard that if you are claiming an entire room, such as a 2nd bedroom as your office, it CANNOT have a bed in it (probably even a sleeper sofa) because that would mean (in the eyes of the IRS) that is is a guest room that you also use for an office, instead of a dedicated space used solely for business.

But will you also FReep from there? Play solitaire? - have to account for that time!!!

No attorney, but I believe that the presence on the computer of one video game or other non-business software, or any evidence in an audit that the internet even once went to a non-business site would disallow the entire deduction. You can't 'account' for the time on FR, it would have to be 0.00000 seconds per annum.

is a guest room that you also use for an office, instead of a dedicated space used solely for business.

This is one of the reasons that many telecommuters use an office not on their property to avoid all of this BS. Whatever you do, before you make a final decision with major consequences TALK TO A TAX ATTORNEY OR A CPA. Someone who is their own tax attorney soon has a felon for a client.

I am the self-employed daughter of a 30-year IRS top level manager. There is some good advice on this thread; pay attention. This is one of the vicious circles of taxation. If you take the deduction it draws their attention; they pay attention because so many take the deduction. Some advice:

1. Keep a dedicated computer for work - surf on another one. I have three plus a laptop - I use one for accounting clients, one for medical research clients and one for personal stuff.

2. Get a good accounting or bookeeping package and set up a record-keeping system. I use Quickbooks Pro - easy to use and you don't have to do 'closing' at the end of the year.

2. Take all the deductions you're allowed - but as noted elsewhere, keep records. In fact, keep several records. I make a folder in Word and scan in receipts - I categorize them by date. The actual printed receipts I put in folders by category.

3. Re: things like a sofa in the home office. IF you see clients at home (and I do) then you obviously need to provide seating space. I have a very large comfortable recliner (yes, I do!) and two side chairs in my office. A psychologist friend suggested this would be a good idea. The clients start out sitting upright, then gradually sink down into the chair and become much more agreeable! Besides, I spend some time in that chair, too.

4. Above all, keep copies of the tax records. So many people keep records of everything, but are careless with the submitted tax forms. Even if you have an accountant or lawyer with records, keep a copy of everything where you can find it.

5. Pictures. Digital pictures. I take a digital photo of every piece of office equipment, office furniture, tables, lamps, etc. I have several digital video camcorders and I took a movie of the room. BTW, this is a good idea to do with all your rooms, for insurance purposes. Adjusters love those photographic records.

Lots of other things to look for, but this should get you started.

Thanks, folks ...!!! I can get a "business only" computer from my prospective employer ... might have to discipline myself on the record keeping! :)

There are many other factors you need to consider. Will you be treated as an employee? If you will be issued a w-2 and not be an independent contractor, will your employer want to ensure that your "office space" meets all OSHA and other standards? If you will be an employee, what are the worker's compensation laws governing office space? Will they be re-imbursing you for your office space, data lines, phone, computer equipment?

I see too many people get into trouble by trying to be both an employee and a private business at the same time. That is a like being a "little bit pregnant". You can't have it both ways. Either you are or you aren't.

If you are an employee, then you need to make sure your employer's insurance would cover any losses to their equipment and information that is stored in your home. Your home owners insurance would not cover that, unless you took out a rider. If they are reimbursing you for that office space, are you prepared for home visits from OSHA officials etc?

If you are going to be treated as a consultant or independent contractor, have you included business liability insurance, an additional 7.15% in social security tax that you will have to pay? Are you actively engaged in the business and provide the same type of service to more than one client? Do the local ordinances allow home businesses or do you have to become licensed in order to have a business that operates out of your home? Lots of questions, lots of problems that should be solved prior to making the change. You could find yourself actually losing money by making the change.

Virtual offices are just starting to become fashionable, however many states and the IRS have not rewritten laws to include them. THey try to apply prior laws to them instead. A good place to start, are the latest rulings on the IRS web site. Many times the IRS remains silent. In other words they rule on a subject by not ruling.

Thanks for the info ... I will be a full-time employee, which I hope simplifies things ... the room contains no bed or even couch ... I expect to be working from it 8 to 10 hours a day ... I know this is a tuff one, but any idea, if I'm paying $820 in rent, how much of that would be deductible? Thanks all!

Below is from the IRS web page. Just remember, you are not a business - don't make the mistake of deducting as if you are. It all depends on your employer. Most of the time you must meet both prongs of the law DO NOT FILE A SCHEDULE C to report these expenses and just report the amount that is not reimbursed-

1. Prove that the expenses were unreimbursable by your employer

2. They must be a condition of employment and for your employer's convienance.

Get it in writing from your employer.!!!! Have them state that you must dedicate solely for their business and for business purposes only, X amount of square feet in your home. Then you can deduct these expenses that are over 2% of your gross income. You must meet the 2% because you are not a business.

IRS RULES -------------------------------------------------

"Home Office
If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home.

You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively:

As your principal place of business for any trade or business,

As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or

In the case of a separate structure not attached to your home, in connection with your trade or business. The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Get Publication 587 for more detailed information and a worksheet. "

I am not an IRS tax specialist but do know this part of the law because I audit businesses for the State, and our law refers to the IRS law in many cases. Remember that your office space is an itty bitty part of the whole picture. Look into your zoning laws, homeowners insurance, liability insurance etc...... in other words CYA!!!!

Thanks a bunch ... this gives me a good starting point ... essentially, I giving up a couple thousand dollars in income to take a job with a company that I believe has a better future than my current employer ... if i can defray some of that with a deduction for the home office that will make my decision easier.

can I write that off? No but if your OFF your rocker, you can.