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No business income, no home office deduction: Wrong.

By
Industry Observer with Green Krist CPA PLLC 34463

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below.

Points to Consider

  • Claim business deductions with no business income. Even if your business did not generate income this year, you should claim all business deductions. Such deductions might create a net operating loss (NOL), which would carry forward to offset future taxable income.
  • Claim the home office with no business income. Claim the home-office deduction even with no business income. The home-office expenses not allowed this year carry over to future years in the separate home-office deduction bucket. And this gets even more important when you consider business miles.
  • Loss of business miles. Trips from your home to many business locations are personal miles if you do not deduct your home office as your principal place of business. Establishing that “principal place of business” is easier than it sounds.
  • File a tax return. Without business income, you may be exempt from filing a tax return. Forget that. File a return. You need a filed return to claim the benefits above.

Action Steps

  • Document your home office. Ensure you have appropriate documentation that proves your home office is your principal place of business.
  • Claim all possible deductions. Even in a loss year, claiming all possible deductions is essential.

Conclusion

Your home office can provide significant tax advantages, even when your business income is low or non-existent. Make sure you position yourself to take full advantage of these benefits now and in the future.

Green Krist, CPA  specializes in assisting taxpayers with IRS and North Carolina Department of Revenue issues in the greater Raleigh, North Carolina area.

Show All Comments Sort:
Michael Elliott
Fathom Realty - Burlington Township, NJ
Burlington, New Jersey Residential Sales

Thankfully, I do have business income, but this is good to know.   I just followed you, please do likewise!

May 19, 2024 09:21 AM
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Thanks for sharing, make it a great Sunday and enjoy the rest of your weekend!

Bill Salvatore, Realtor- Arizona Elite Properties

May 19, 2024 11:44 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

My CPA explained how it could affect taxation when I sell if I use my house as a home office, so never did.

May 19, 2024 01:26 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Kelly Green-Krist ,

I'm glad that Bill Salvatore - East Valley re-blogged your post. Good information to share. I don't have a home office (not that I claim) but never heard of this so learned something today.

May 20, 2024 06:00 AM