Home Office: Reporting and Defending the Deduction (2012 Edition) (00311067)

Taxpayers that use their homes to conduct business may qualify for a home office deduction. This deduction is available to taxpayers who work from an office located in their homes, as well as to those who use a part of their homes to provide day care services or to store inventory and products they sell. This course focuses on the statutory rules for taking a deduction for the business use of the taxpayer’s home. From this discussion, you should be able to determine which types of taxpayers are allowed to deduct expenses related to the business use of their homes. The requirements for each type of taxpayer that qualifies for the deduction are explored and explained.
Final Exam > Results Page

final exam score:

final exam status:

100%

Question 1

Correct

Employees deduct expenses for business use of their home on:

Form 8829

Schedule C

Schedule SE

(You Answered) (Correct Answer) Schedule A

Question 2

Correct

If the IRS conducts an examination regarding home office deductions claimed, the following is one of the best ways to show the allocation between business and personal use:

Canceled checks

Credit card sales slips

(You Answered) (Correct Answer) A diagram of the house or apartment floor plan, identifying the portion of the home used for business purposes

Videotape of the home, including the home office

Question 3

Correct

Joel Spunk is an employee who has established an office in his home to conduct employment-related activities. The office is 10% of the square footage of his home. Joel meets the qualifications for the home office deduction. In 2012, Joel paid real estate taxes of $6,500. What amount should Joel deduct as on Schedule A (line 6)?

(You Answered) (Correct Answer) $6,500

$650

$5,850

$0

Question 4

Correct

Diane Adams works as an administrative assistant for a local firm. She also operates a business out of her home. Diane has a home office that she uses exclusively and regularly for her business. Her house is 1,500 square feet; the home office measures 300 square feet. For 2012, Diane had the following expenses: \r\rAdditional insurance paid for the home office equipment $ 100 \rDepreciation 2,500 \rHome mortgage interest 7,700 \rHomeowner’s insurance 660\rPainting of kitchen and dining room 1,000\rReal estate taxes paid during the year 4,200\rUtilities 2,200 \r\rHow much of Diane’s direct expenses and indirect expenses will reduce her business income if her gross income from the business is $45,000, and her non-home office related expenses are $30,000?\r

Direct: $100, indirect: $3,652

(You Answered) (Correct Answer) Direct: $100, indirect: $3,452

Direct: $0, indirect: $3,672

Direct: $0, indirect: $3,472

Question 5

Correct

Catherine Johnson uses a portion of her home to operate her day care business for preschool children. The square footage of Catherine’s home is 2,200 square feet. The square footage of the portion of the home used for day care is 1,000 square feet. During 2012, Catherine uses the portion of the home for day care an average of 8 hours a day, 5 days a week, for 50 weeks. Catherine and her family use the space during the other times. What is Catherine’s business use percentage that she reports on Form 8829 and uses to allocate her indirect expenses to business use?

100%

45.45%

22.77%

(You Answered) (Correct Answer) 10.35%