Proper Way to Establish a Home Office Deduction with an LLC
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Working from home? With tax day just around the corner, you might be eligible for some GREAT tax deductions from the office you've setup in your home! In this video, tax expert Karlton Dennis shows YOU how take advatage of these deductions. We go over:
- Who qualifies for the home office tax deduction
- How to set it up
AND
- How much you can reduce your taxable income just by having one
Watch this video to avoid overpaying to Uncle Sam and to get educated on how to leverage the tax code!
Are you a business owner or real estate professional?
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*Disclaimer: I am not a financial advisor nor am I an attorney. This information is for entertainment purposes only. It is highly recommended that you speak with a tax professional or tax attorney before performing any of the strategies mentioned in this video. Thank you.
We made our main living space our office. We’re taking regular deduction. 28% deduction on rent, utilities, internet! Nice. And yes, confirmed with my CPA, who has access to our quickbooks gl
does the house have to be a 2 bedroom in order to do this? can you do that with a studio apartment?
@@tonycruise I don't think that matters at all. As I said, we use our primary living area (living room). We did this solely because it's the largest room in our apartment (28% of the square footage), so it provides the greatest tax benefit (company pays 28% of rent). I would think that as long as you can reasonably explain why 30, 40, or 50% of your studio is primarily used as a place of business, you wouldn't have a problem (no, you can't write off the kitchen just because it's a studio 🤣). All that said, I'd check with your CPA to confirm. If you don't have a CPA...get one.
@@jdstarek unless you have a cooking channel on youtube x)
I attended the AOA seminars years ago listening to your mom. You were just a kid back then. You make the task of talking taxes a little easier. Keep up the good work. I will like & subscribe. I am very proud of you.
Julius Ward
Your home office should be the biggest room in the house its also my employees recreational area. I employ my family
great video brother! I don’t know who edits your videos but good job to him (or you)! Thanks for the knowledge 🤝
I have so many meetings in my living room area, the dinning area turned into my office and there are bins everywhere, printers, etc. I had to move into my closet as a bedroom 2 years ago, because of how much I use for work. It's insane but I'm always working. ALWAYS WORKING!
What if I operate a food cart? I spend much of my day outside but I count my beans in my makeshift office in the basement.
Love these videos
Using the $5 method, I’m getting a $720 deduction on my 12x12 workspace, while my yearly expenses are only $4500. 💪🏼
Thank you so much! Have you done a video about a virtual office for small business owners, LLC etc...? If not, could you please do one?
You are amazing, thank you! 👑
Great information, I work out of my garage exclusively for my business. Do I measure the entire garage and go from there?
Great video! May you please steer me in the right direction for my situation?
I live in a one bedroom apartment and work from home in my business. I meet with clients online throughout the day. I have a designated space where I work. How should I proceed with calculating the measurements/estimates since it’s not an actual office? Thank you in advance, I appreciate it.
Great informative videos, keep up the good work Karlton!! Can I use office deduction and garage space if I use both for business?
This was also my question. What if I use a spare bedroom as my office space and my loft upstairs (overlooks my living room) as my work space where I actually made my product? Can I combine the sq footage? Thank you in advance. Love your videos. I am so glad I found you. Your videos are making becoming a new business owner a lot less stressful.
What about if you use a garage for storage like a warehouse and have spare bedroom that can be utilized as a home office. Would you be able to use both added together? Could I take that percentage and pay insurance and other utilities/deductions directly from the business acc/card?
Can you make a video of tax write offs and deductions for college students
Love your content!!! Question: Are Home Office Expenses on Schedule A or Schedule C (LLC Income and thus applied directly against LLC Income)?
Thank you
Which type of LLC would be right for a day trader trading forex
@Karlton Dennis, great series of videos, I've learned so much already!! I have a side hustle business based out of my home office, while attending a 9-5 job in a work office, would I qualify for the home office deduction?
I think he said if you're self employed, so im trying to understand the gist of it. So if you wrk 8-12 hour shift but have a home based business, you can't file for the deduction? That's the main question for me.
I plan to utilize my entire detached garage which is 480 sq ft. Can I also include the bathroom in the residence that i would utilize while Im working. Also, do you only calculate the living space suck as kitchen, dining room, living room, game room? Do you include the front garage, front porch, back porch and detached deck. That is how its broken down on the CAD.
@karlton what if I have an external structure on a property used as a short-term rental?
What color did you use for the walls in the office you are at? I want to use that same color to paint my office 😅
What if your home office is partially used for personal use, say from your bedroom or living space? Can deduct anything for that, or does it have to be a dedicated “business only” space?
I work part-time and has a side gig in which a home office is necessary. The home office is exclusively for business because I work in the hospital and it’s a different field. Am I eligible for the home office deduction?
Thanks,
The information will come in hand as I am looking to purchase a home
I work for a hospital during the day. But I have an investment property and llc that I run out of my home office. Am I eligible for the home office deduction?
This comment is off topic but here's my situation. I am looking to acquire an established business. I started a holding company thinking I can use the existing business as a subsidiary company. The problem is the owner of the business is set up as a sole proprietorship so he does not have a separate entity. His business has been around for over 30 years and I do not want to change his DBA name to my holding company's name. My question is should I have set up an LLC with his DBA name first and have my holding company own that LLC? I am trying to use the strategy from the holding company video on this channel. Hope this makes sense. Any insight will be appreciated. Thanks!
What if I live in a room in a house that I pay rent for? I sleep on one half and work using the other half. How would I write this off?
how would you pay for this? on a business card or personal?
Quick question #Karlton Dennis @Karlton Dennis, if i'm a business owner and we're using a room as a home office, but we have toys in that room because our baby is 2 years old and we have to watch him while working. would that be acceptable by the IRS? or we have to remove the toys and figure out another way to watch our baby?
hi
does simplified version works, if my LLC has an agent and hidden address from the public?
Hey Karlton, I’m a little confused, perhaps you could help me figure this one out…I'm a full-time w-2 employee and I just opened LLC which is not related to my w-2 job. I have a designated area in my apartment and it's being used exclusively for the administrative and all other purposes of my LLC business. Can this home office qualify for tax deduction?
Can a monthly subscription to a financial group that has a cpa and financial advisor along with others be tax deductible if I have it auto renewed on my business credit card the group I’m speaking of is ran by George acheampong and his partner
Would i qualify if I live and work in my fiancés' home?
Question, you said only if you're self employed you can get that deduction?I'm trying to understand the gist of it. So if you wrk 8-12 hour shift 3 days a week, but have a home based business, you can't file for the deduction? That's the main question for me.
Ok
I don't see the link for the step by step guide.
Can you claim home office deduction if half your home is used exclusively for business as a sole LLC owner, but I also am employed by another company thus earning a W2 fulltime from another employer
In AZ you can. I've done it for the last 2 years.
What if I’m a W-2 employee but also run an STR business that I run out of my home office?
That’s me too!
You're doing the Lord's work.
Nope, nope....! What do you make of an Administrative Use exception in home deduction??🤔
Is it possible to have w2 income go to an LLC and if so would this qualify as self employed? Thanks
W2 income is already taxed so it wouldn’t make sense to pass it through an LLC
Hey what about mortgage principle?
Thanks~~for watching!!
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Karlton,when calculating the total home area, are we supposed to use living space only, or does the garage count? I have an over-sized garage that is knocking my home office percentage down dramatically.
You only add the garage if you’re using the garage. However, you don’t have to use all of your garage to take all of your garage. If you use any portion of your garage, add it to the total sq ft of your home and include all of it as used space.
@@sawcheryl I don't think that's right.. how can you count all the garage if you only use part of it?
Besides, my question was if I should count the garage area towards my total home area. It's an attached garage, if that matters. Currently, the only area in my garage that I could claim for business, is the space I use to park my car, but I'm not sure if that is allowed.
@@mf-sp2pg The IRC states if you use any part of the garage you can count it. I also answered your question about counting it. The garage is not counted in the total square footage of a house at all. Neither is any square footage that is even partially underground.
Only add the garage footage in if it’s being used.
You asked this question 9 months ago and never got an answer. I’m an accountant and tax strategist. Talk to your tax accountant.
@@sawcheryl Thanks for the reply. even I forgot I had asked this question.
Great video. could you have a home office deduction on a dorm room?
So you're saying I can't have a bed in my home office?
So if i spent about 10k on expenses to repair and remodel a studio, how much can I deduct on that besides the equipment that I also bought for my business? Also about 10k.
Likely just the equipment expenses (which may need to be depreciated based on the lifespan) as your remodel would be considered a permanent improvement. Per the IRS "A permanent improvement increases the value of property, adds to its life, or gives it a new or different use. Examples of improvements are replacing electric wiring or plumbing, adding a new roof or addition, paneling, or remodeling. If you make repairs as part of an extensive remodeling or restoration of your home, the entire job is an improvement." A CPA would be able to advise on how to be able to properly account for the equipment and permanent improvement depreciation.
what if the business is in my spouses name?
@karlton Great video! As an entreprenuer with an LLC, can i retroactively use the home office deduction once I create an LLC and can I apply this to my personal taxes for 2021? I'd love to hear someone repond because im trying to file ASAP! Thank you kindly.
How would you calculate part of the garage
imagine drawing a rectangle under the part of the garage that you use for business. lets say the rectangle is 8 feet long and 10 feet deep. your area is 8x10. So you use 80 square feet for business.
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Can this still be done even if living with family while still legit running your business from home? Thank you for all you do🙏🏽🙌🏽🖤💜🖤
Nah the house has to be in your name !
Why don’t you ever discuss the administrative clause in home office tax deductions? For example my home is my main place of business but I don’t have a designated area, I take phone calls throughout the house and use my laptop on various places throughout the house
im sorry person but you got it all wrong
Why do you say this?
@@thecraftloft say what
@tomholder Why are you saying that he got it all wrong? I'm genuinely curious if some of this information is false. Can you elaborate?
@@thecraftloft who got it all wrong, im bit confused
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