Telecommute? You may get a tax break

(MoneyWatch) There are many benefits to occasionally working from home, both for your company and for you personally. But is there a tax benefit? Maybe.

As personal finance blog Doughroller points out, it's possible to claim a home-office deduction for your time spent working in your bathrobe. But the path is narrow, and you'll need to tread carefully.

First, it's worth pointing out that I'm not a lawyer, and you'll want to chat with a tax professional before trying to claim a home-office deduction for teleworking. But IRS Publication 587 - Business Use of Your Home spells out the key criteria. You must use your home:

Exclusively and regularly as your principal place of business, or
Exclusively and regularly as a place where you meet with patients, clients or customers as a normal course of your trade or business.

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If you've ever run your own business from home, you might be familiar with those rules. But there's more. If you are working from home while in the employ of someone else, there are additional criteria:

Your business use must be for the convenience of your employer, and
You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.

The first one -- "for the convenience of your employer" -- is the sticky part. Most teleworking agreements are done for the morale and convenience of the employee, not the employer. So it's a good idea to get a letter from your manager that says you are working from home for the convenience of the business. That, and go see a tax pro for additional advice.

Has anyone ever claimed a home-office deduction as an employee rather than as a self-employed entrepreneur? If so, please let us know your experience with this part of the tax code.

Photo courtesy of Flickr user mksout

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Dave Johnson is editor of eHow Tech and author of three dozen books, including the best-selling How to Do Everything with Your Digital Camera. Dave has previously worked at Microsoft and has written about technology for a long list of magazines that include PC World and Wired.

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colincollect58 says:: Telecommuting is only going to continue to pick up steam. The main concern that many employers have is making sure the work they assign gets done in a timely manner. Now, these employers can use TransparentBusiness.com and track every employee's task progress in real time. Since this is a seamless application, they can do this regardless of where that employee is or where they are for that matter. This in turn promotes trust in telecommuting thus prompting more of it.; reply

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coloradoprof says:: I have been working from home for the past 12 years and have always taken the home office deduction. A couple of years ago, I was audited for tax years 2005, 2006 and 2007 and didn't have any issues with the deduction.

I'm about as honest as they come with regards to taxes. The IRS did everything they could to find wrongdoing, in the end, I received small refunds for each audited year. However, I spent 10,000 in attorneys fees dealing with an 11 month audit!!! To this day, I don't know what flagged the audit. I never took excessive deductions and I've always had to pay taxes! Go figure.

Anne Anderso
Legitimate Online Job Directory
http://www.LegitimateOnlineJobDirectory.com; reply