Office time vs. Field time

Discussion in 'Business Operations' started by PR Fect, Feb 5, 2011.

  1. PR Fect

    PR Fect LawnSite Bronze Member
    Messages: 1,076

    For those of you who are self employed, or work with your crew on site, how is your time divided? Its a tax question about percentages of home use for business.IRS wants to know how much time I spend on the job, and what percentage I spend in the office at home.I would think that also includes time at home in the shop doing maintenance. My guess would be 50% working at home, 50% in the field on the job.
  2. BlueStarLawnCare

    BlueStarLawnCare LawnSite Member
    Messages: 18

    Be careful with the home office. The way it is supposed to work, is where ever your home office is, you are not supposed to use it for any thing else. Measure the size of it compared to your house. You can deduct that percentage of expenses.

    As far as maintenance, that is not done in your home office, so that doesn't count towards that.
  3. PR Fect

    PR Fect LawnSite Bronze Member
    Messages: 1,076

    Yes I know it can be tricky. And most of the time what triggers a red flag is if you are clamming something out of the norm. That is why I 'm asking what others do. Try and fit the mold best I can, for what other LCO's my size do. As far as the shop, its a separate building we use for storage and maintenance of the equipment and storage of supplies. So yes its 100% deductible. The question being asked is not what percentage of the home is work space. I have already calculated that. The next question that I was asked is what percentage of my time is spent in the home compared to time in the field. Has to do with the percentage of income earned at home and the limits of home expenses like utilities and house repairs that you are allowed.
  4. Bruce's

    Bruce's LawnSite Member
    Messages: 10

    It doesn't matter how much time you spend in your "home office" as long as you use it strictly for business use. The percentage of space it takes up compared to the rest of the home is the percentage of cost you can deduct from mortgage, insurance, utilities, etc. This is something i don't even consider because after working in the tax field for many years I've seen the good, bad, and ugly when it comes to home offices. Its always good to have that other business deduction but the real issue comes in to play when you sell your business or house or both. Once you start claiming a portion of your personal residence as a business expense it then becomes a business asset which if the house is sold becomes a business asset being sold and can result in recapture of some or all of that expense as a gain for selling an asset. It gets even more complicated if you ever get audited because if the IRS finds one piece of evidence that your "home office" is also being used for personal reasons then they will disallow some or all of your deductions and can go back over prior years to disallow those deductions which results in a hefty penalty and back taxes owed. My advise, use the shop as your business deduction and build an office space in there. When it comes to the IRS keep a distinct line between your home and business.
  5. PR Fect

    PR Fect LawnSite Bronze Member
    Messages: 1,076

    You are incorrect. I don't know how old the IRS rule is but its something you have missed. The office deduction for the part of the home is also one of the best reasons for having a home business. Its worth more than any potential problems at a sale IMO. So how do you guys think your time is divided?
  6. PR Fect

    PR Fect LawnSite Bronze Member
    Messages: 1,076

    So nobody trac's this?
  7. Az Gardener

    Az Gardener LawnSite Gold Member
    Messages: 3,899

    I don't recall that being a question my CPA asked this year when we had our pre filing meeting. In fact I don't ever recall him asking that question. He did warn that while the new administration is pounding their chest about being pro business and giving numerous breaks and incentives to small business on the front end. On the back side they have hired numerous auditors and are clamping down on the old traditional loopholes like the home office deduction.

    Just a word of warning. I believe I have one of the best CPA's in the country he is constantly immersed in the tax code. After the traditional season is over he travels the country speaking and educating other CPA's on the new laws, interpretations and implications.

    If he says were not taking any home office deductions this year... were not, end of story.

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