Why Pay and Prepare Your Taxes

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Home Office Deduction Self-Employed

The home office deduction allows qualified taxpayers to deduct certain home expenses when they file taxes. To claim the home office deduction on their 2021 tax return, taxpayers generally must exclusively and regularly use part of their home or a separate structure on their property as their primary place of business.

Here are some details about this deduction to help taxpayers determine if they can claim it:

  • Employees are not eligible to claim the home office deduction.  
  • The home office deduction, calculated on Form 8829, is available to both homeowners and renters.  
  • There are certain expenses taxpayers can deduct. These may include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.  
  • Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.  
  • The term “home” for purposes of this deduction:  
    • Includes a house, apartment, condominium, mobile home, boat or similar property.
    • Also includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse.
    • Doesn’t include any part of the taxpayer’s property used exclusively as a hotel, motel, inn or similar business.
       
  • Generally, there are two basic requirements for the taxpayer’s home to qualify as a deduction:  
    • There generally must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
    • The home must generally be the taxpayer’s principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.  
  • Expenses that relate to a separate structure not attached to the home may qualify for a home office deduction. They will qualify only if the structure is used exclusively and regularly for business.  
  • Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction:  
    • The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.
    • When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.


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What Is a Tax Accountant?

Ok. So, you ask what a tax accountant is. The short answer, a Tax Accountant is someone who has been train in preparing income tax returns and is an Accountant. Thus, the term Tax Accountant refer to someone that specialize in the tax laws, rules, and regulations.

Ideally, a Tax Accountant training must include any of the following.

  • An Attorney
  • CPA – Certified Public Accountant
  • Enrolled Agent
  • Tax Practitioner

These are the four categories of people the IRS considers preparing taxes and represent their clients. The list of people practicing before the IRS is much longer. See Publication 947 (02/2018), Practice Before the IRS and Power of Attorney | Internal Revenue Service

However, a Tax Accountant must know tax laws as well as General Accepted Accounting Principles (GAAP). Sixty percent (60%) of tax filing deals with tax laws and the other forty percent (40%) deals with accounting.

So then, a Tax Accounting is someone with adequate knowledge of tax laws as well as General Accepted Accounting Principles. These two qualities are not mutually exclusive.

What is a CP53A IRS Letter?

Question: Why did I get a cp53a from the IRS if I didn’t file taxes for 2020 it came in my child name also her father filed not me?”

The IRS CP53A Letter means IRS tried to deposit your tax refund into your bank account but your bank cannot process the submission. The IRS will research your account but it will take 8-10 weeks to reissue your refund. The IRS maybe trying to get a hold of someone that’s why you are getting this letter

The letter usually ask you “please follow up your refund by calling IRS to this number 1-866-682-7451.”

Friendly Tax Services

LA PREMIER Tax dba Friendly Tax Services is the premier income tax preparation firm for individuals, families, small business owners and the self-employed; Uber, Lyft, Taxi, and Limousine drivers; Actors, Independent Contractors and Entrepreneurs. We have empathy and understand the toll driving takes on Uber, Lyft, Taxi, and Truck drivers. That driving is time consuming. Uber drivers just don’t have the time it takes time to keep track of those business-related expenses.


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