Video instructions and help with filling out and completing Who Form 8815 Deductions

Instructions and Help about Who Form 8815 Deductions

Hi everybody I'm attorney Aiden Kramer with the law office of Aiden H Kramer in Colorado and as I hope you know you are watching all up in your business so from my last few episodes you'll know that we are talking tax tax tax tax you guys have a lot of tax questions and I don't like answering tax questions so my friends Joseph Lutz and Natalie let's power here to answer some of those questions that you guys ask me I know that you guys have a lot of questions about having a home office I started my business out of my home and so as a small business I know that that's usually where it starts because you have probably limited capital and limited resources so it's usually easier to start working from your home and there are a lot of tax implications that come from that so Joe and Natalie why aren't you guys to jump into it and let us know about working from your home I'm Joe let your small business cpa where a premium small business package does make a difference in talking about office from the home expenses Natalie how do I qualify for an office in the home so basically if you work out of your house it needs to be your principal place of business you need to have an exclusive space and it needs to be on a regular basis okay let's say I have a business and I have a storefront so I really have a storefront and an office in the home can I deduct those yeah you can deduct both as long as you do administrative and management tasks out of your home in that exclusive space and we say an exclusive space that doesn't have to be a whole room it can be a little desk or one area should probably be a little bit separated from maybe your kitchen table something a little bit off to the side where your kids are hanging out eating dinner that you can call your office and that space can be used as your office in the home and then once you have that you can also deduct your storefront as long as you're doing the management and administrative tasks so what is the real advantage of an office in the home if a storefront the best thing is your mileage so when you have an office in the home and a storefront you can deduct your mileage from home to the officer storefront everyday and back at 57 and a half cents a mile so you can really rack up some auto expense deduction from having both so let's say I have an escort and I have a storefront and I have an office in the home why is an escort better with an office in the home then a Schedule C LLC there's really two reasons that it's better number one is audit risk on a Schedule C LLC required to file Form 88 29 it lists everything out for the IRS to see it lists the total square footage of your home the square footage of your office and individual expenses by line item with an S Corp we just reimburse the business owner for the actual expense used we use the same calculation but we're not telling the IRS this information so they can't think it's bad and the another advantage is depreciation so as a Schedule C required to depreciate your home that means take an expense for depreciation each year what happens when we go to sell my residence and I've done this of this office and the home stuff so if you are a Schedule C you'll be required to recapture the depreciation basically which means pay tax on it whether you have taxable gain on the home or not in an S corp there is no depreciation it's not an actual expense that could be reimbursed so it's free and clear you don't have to worry about any recapturing of depreciation and so you say on an S corp we're taking these expenses how do we do that so we like the business to reimburse the owner for the actual expenses so figure your business percentage take that multiplied by your mortgage interest real estate taxes rent if you rent insurance and utilities figure the business percentage of all of those and write yourself as the business owner a check once a month or once a quarter for those expenses it's not subject to payroll tax or federal withholding but just kind of makes it easier on the business owner do it once a month it's done so it's basically another way to pay yourself without having to pay taxes since you're just reinforcing yourself right so it's getting cash out of the business that goes to the owner it's not taxable to the owner but the business is getting a deduction that's great and so let's say I have an office a storefront 30 miles away from my home office and yeah at my home office I do work out there one full day a week in probably three other days part time a week now that seems like it would expose my return how does that affect everything when you're taking that much expense 30 miles did you say one-way right I mean that 60 miles a day at 57 and a half cents a mile we're talking thirty five dollars almost a day of auto expense that you're taking that is totally legal and fine but just when you are pushing the limits like that documentation becomes extremely important so I would definitely have odometer readings for your auto expense every single day and even sometimes we suggest a little bit of a diary about what you're doing out of your house so you can just have proof that you're working out of there more than