Discussion:Business use of home- Interest/taxes/utilities

Example I use 20% of my home for business.

Can I claim the whole of Mortgage Interest and taxes in Schedule A (Instead of 80/20) and still claim 20% of other utilities in schedule C?

Mortgage interest reported on the wrong form is another issue.

I buy supplies, don't deduct, oh well.

Caution. When figuring your net earnings from self-employment, you must claim all your allowable business expenses.

Can't be any plainer than that... I wouldn't claim home office expenses one year and not the other which a couple of my client's have tried to do this year to get earned income credit. Before you make a blanket statement, you may wanna do some research.

My statements were meant to be blanket and not absolute. Claiming home office one year and not the next is much different from not taking a deduction for office supplies. Although, I think it would be arguable and ok.

The IRS has the ability to disallow deductions because no receipt is available. Why should the TP be forced to claim a deductionif there is no receipt. Double standard I would assume.

If I have no mileage log, the IRS will disallow. TP has no mileage log, how can they impute mileage?

I just scanned through the entire publication you posted and not anywhere in there did it state that all possible deductions must be claimed. Will the IRS come in and say, wow, you have a home office, you must take it.

A home office is not required to be taken. I can elect out of deducting that if i choose. And yes, that is a choice. Depreciation allowed or allowable, so if I sell, cap gain is calculated based on the depreciation allowed or allowable. I would argue that home office can be swapped in and out without issue.

I have seen a cite somewhere where it talked about allowable deductions being taken, haven't seen one where it specifically states ALL deductions must be taken, that we must scour to the ends of the universe to make sure all is taken. Understatement of income is not allowed. I don't think overstatement of income is not allowed.

There are intelligent people who disagree with my point and intelligent ones that agree. Then, there are the moral police who think it shouldn't be done on moral grounds. It's ok for all the other loopholes, but not this one. Don't like it on moral grounds, change the law. I had a client take a $70,000 section 179 that gave him full amount of EIC. I kept evaluating the numbers to specifically maximize EIC. I felt great about doing that for this couple that had $100,000 of income prior to me doing that.

Heck, I may be wrong, but, then again, I may be right. Show me the light and do it in a friendly discussion like manner, don't come at me with a totally BLANKET line, like this is the rule, it's black and whit, can't get any plainer than that. That stuff don't fly.

Show me I'm wrong and i'll admit it. I've read the posts and still disagree with the authoritative intelligencia here.

If you are going to claim earned income credit, you must take into account all allowable expenses. If you write out a check for office supplies, even though you may have forgotten about it, it is still an expense that should be used to compute your net income. What I have a problem with here, is taxpayers who are purposefully forgetting about deductions that would normally be used to compute net income in order to abuse the EIC. If you truly don't have a office in the home this year because your circumstances have changed then I will agree with the point, but if nothing has changed, why wouldn't the taxpayer take the deduction in the current year? Either last year's tax return is incorrect or this year's is incorrect if the circumstances are the same. Maybe my views are skewed. I've come from a background where I have seen large abuses of the EIC and I will not "help" a taxpayer forget about deductions he normally incurs and deducts every year in order to get an additional kickback from the government.

We all know this phrase right? Sec. 61

"Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:"

Why is it when this phrase is turned around for EIC purposes to "deduct from that income all allowable expenses" then ..well..it doesn't apply because it doesn't fit into our agenda?

I don't really see it as abuse unless it is specifically spelled out. Again, I'm not saying it's not spelled out, just that I haven't seen the cite. You are claiming it's not allowable to exclude expenses. I'm claiming to be from Missouri. Show me. I'll agree with you if you can, but will defend my position if you can't.

IRS can't have it both ways. I lose receipt, but have canceled check to office max, they say no deduction. I don't have mileage log, they say no deduction. They cannot impute that back to reduce EIC>

As for home office expense, that is a voluntary deduction, just like Section 179. I don't care if I took it the last three years, if I exclude it, that's my choice.

My job is to maximize my clients refunds through any legal means possible, the fact that this is a gray area isn't my fault. Change the law.

The fact that you saw real abuse doesn't change this situation. Sorry.

Show me.

I'm not trying to take the moral high ground here. The point i'm trying to make is that I have clients that may just fall into this EIC situation and they are honest clients trying to report their income and deductions accurately in a way that reflects their affairs. If this happens so be it and i'll be happy to tell them about their additional refund. As I stated before, what I have a problem with is clients AND tax preparers working together to abuse the EIC by not adding deductions to the return that the taxpayer actually incurred or by taking aggressive positions on tax issues. This to me is EIC fraud and whether immoral, illegal, or maybe the taxpayer never gets caught, at least I sleep well at night.

If they give you the information, then take it...if they don't let it go. Just because they have a business out of the home though doesn't mean that they have a home office. I sell Premier Designs...I don't claim any of my residence as a home office because, I bought my computer for more than just working on my buisiness, I have personal information on there. The storage that my business supplies takes is less than four square feet...you tell me, it it worth it to you as a tax preparer to figure out the electric, depreciation on the home, computer, yada yada yada on four square feet of a 1245 sq.ft. apartment? Didn't think so. You will charge them more for doing that than the benefit they will get if you do. So you tell me at that point, are you being ethical or are you just trying to get more money out of your clients?

Why is it that it's fine to take a Sec 179 for 70,000 out of a possible 100,000 that puts a TP in the largest EIC area possible, but not ok in the other situation if there is no SPECIFIC cite against it.

I know there have been talks, but give me a good search term and I'll re-read those others to see if there are specific items forbidding expenses.

Not being contrary, I just want to know and because someone said so doesn't fly. I'll read the other stuff, just don't have a whole bunch of wherewithal to search. I'm really bad at that.