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Utilities Deduction?

Forum|Forum|5 years ago
February 24, 2021
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If I do not meet the exclusive use condition for claiming a home office deduction am I still able to claim a portion of my utilities as an expense? All of the business is conducted from the home in my bedroom and requires the internet to accept orders, communicate with customers, create listings, advertise, print shipping labels, etc.

Deduction

Best answer by gloriah5200

If internet is an "ordinary and necessary expense" for your Sch C "sole proprietorship" business.

Using the internet in your business as well as web-based advertising expenses may be deductible for your business depending on the business. Please refer to IRS Pubs 535 and 334.

You cannot deduct internet use for a W-2 job because the job expenses for a W-2 job are no longer deductible.

If you use a portion of your internet cost for your business and keep records documenting the amount that is used for your business, vs other uses, you should be able to deduct a portion of your internet cost for a business expense.

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Cynthiad66

Generally speaking, to qualify for the home office deduction, you must meet one of these criteria:

Exclusive and regular use: You must use a portion of your house, apartment, condominium, mobile home, boat or similar structure for your business on a regular basis. This also includes structures on your property, such as an unattached studio, barn, greenhouse or garage. It doesn't include any part of a taxpayer's property used exclusively as a hotel, motel, inn, or similar business.
Principal place of business: Your home office must be either the principal location of your business or a place where you regularly meet with customers or clients. Some exceptions to this rule include day care and storage facilities.

What is "exclusive use"?

The biggest roadblock to qualifying for these deductions is that you must use a portion of your home exclusively and regularly for your business.

The law is clear and the IRS is serious about the exclusive-use requirement. Say you set aside a room in your home for a full-time business and you work in it ten hours a day, seven days a week. If you let your children use the office to do their homework, you violate the exclusive-use requirement and forfeit the chance for home office deductions.

The exclusive-use rule doesn't mean:

You're forbidden to make a personal phone call from the office.
You have to rush outside whenever a family member needs a moment of your time.

Although individual IRS auditors may be more or less strict on this point, some advisers say you meet the spirit of the exclusive-use test as long as personal activities invade the home office no more than they would be permitted to in an office building. The office can also be a section of a room if the division is clear — thanks to a partition, for example — and you can show that personal activities are excluded from the business section.

Please use this article for more information on Exclusive Use

The Home Office Deduction

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yoyceleguinAuthor

I'm familiar and understand that I do not meet this requirement. My question was whether or not I can consider my internet bill a business expense.

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gloriah5200Answer

If internet is an "ordinary and necessary expense" for your Sch C "sole proprietorship" business.

Using the internet in your business as well as web-based advertising expenses may be deductible for your business depending on the business. Please refer to IRS Pubs 535 and 334.

You cannot deduct internet use for a W-2 job because the job expenses for a W-2 job are no longer deductible.

If you use a portion of your internet cost for your business and keep records documenting the amount that is used for your business, vs other uses, you should be able to deduct a portion of your internet cost for a business expense.