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Every tax season in NYC, I hear rumors that it's possible to write off your monthly rent... Is that true?
- Michelle
Sort of. You may be able to write off part of your rent, but only under certain circumstances.
According to Kiplinger's Personal Finance, "You might be able to deduct your home office expenses if you do your freelance work from an office in your house." This personal finance column on their site states, "You must use an area of your home regularly and exclusively for business. The area must also be the principal location of your business or the place where you usually meet with clients. Your home office doesn't need to be a separate room, but it should be separated from the rest of your living space -- you can't take the deduction for your living room, for example, if you occasionally sit on the couch and work on your laptop." And for a little more light reading on the subject, including a flow chart of whether you can deduct a portion of your rent or mortgage, check out the 31 pages of IRS Publication 587. If you're self-employed and are unsure about how to maximize your deductions, you might want to consider hiring a professional to prepare your taxes - the benefits will probably outweigh the cost. Here's a handy About.com article on how to find a tax preparer.
Ask Gothamist readers: Do you do your own taxes, or go with a pro? Let us know!
Need advice? Ask Gothamist! E-mail ask(at)gothamist(dot)com.
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I use Turbotax online. Quick and simple. Remembers what i put in last year and applies it to this year's return, AND connects to my payroll company to get my 05 W-2's! I really didnt have to type in anything.
Oh how sweet it is...
Do it on my own on the paper forms. It's not that hard if you only have one job, not self employed, don't make much money...
In NJ you can deduct your rent, BUT you cannot file the EZ form and if you have roommates, it gets tricky. I think you have to file the NJ 1040A and it's under the homeowner/homestead part.
I use H&R Block online. Super easy, particularly if you're filing in multiple states. Like Turbotax they have all last year's info saved and file up to 2 forms electronically.
Anyone have any recommendations for an accountant who is relatively inexpensive and experienced doing taxes for people that who have full-time jobs plus freelance on the side as writers/editors/performers?
I have decided to not pay a dime to the IRS by claiming everything back for 05. What is the best way to do without getting busted?
1) Set up own non-profit religious sect.
2) Off shore income trust.
3) Declare my pets appliances and imaginary friends as dependents.
4) Other ideas?
A ghetto woman at one of my jobs CLAIMS that she declares her dog as a dependent, and has a special "number like a social security number" for him...crazy bitch..
Jae, it's not too far fetch when you think about it. Most housebroken pets do depend on their owners 100% for all their basic needs, and they are pretty expensive. I don't know where the woman got the SS number for her dog, but pets should have id numbers for this purpose (not SS numbers since they don't work, unless they are seeing eye dogs)
I can make the same arguments with appliances, since we do maintain them while they do their work (so they should have SS #'s as well). Imaginary friends depend on us to exit, hence the dependency write-off for them.
I am sure there are other "dependents"
I meant to "exist" above,of course
Geez, I thought I was nuts...
editors, does this belong here?
I was going to post my warning about taking the home office deduction, but after reading Grandpa above, I'm thinking of moving to the next car, if you know what I mean.
Anywho, I solider on...
Every accountant, starting with my bank VP brother, has told me that taking the home office deduction is a great big red neon sign saying AUDIT ME!!! PLEASE!!! NOW!!! It seems to be one of those things the IRS loves to crack down on, maybe because so many people think they can do it, but not nearly as many actually can. All I would say is, proceed with extreme caution and make sure you can back it all up.
Oh, and BTW, TaxSlayer.com is terrific. Fourth year using them. They talk you through it all online. Get the forms done in an hour, get the return in two weeks. $9.95 to efile federal, no charge for NY State.
Janine/Jen - please delete post #9 as it is irrelevant to this discussion; move to Lunatic Fringe Forum.
re: Form 8829, deducting your home office - this only applies if you are a Schedule C (sole proprietorship) filer. It's a audit red flag - no problem if it's legit, but if you take the deduction, be prepared to present a floor plan which depicts the % of the square footage of your home and that portion which is deemed the work area (e.g., you have to justify why xx % of your rent is for your home, xx % is for your office). You would do well to carefully reread the restrictions in Janine's original post.
re: deductible NJ rent - fill out part II of NJ schedule 1-A. While there are nuiances if you are a part year resy or have roomates, the underlying computation is 18% of your rent flows through to Line 36 of your NJ 1040.