To Claim Home Office Credit Or Not????

[MsCathy]

Hello...I have been doing daycare for the last 7 years and always used Turbo Tax for my taxes. I have Also used Tom's record keeping books and do a lot of research on daycare deductions. This year I have a bit of a problem....

This will be the first year I have done daycare in a home that we rent rather than own. I have always used the Home Office deduction and because we had such a high mortgage rate it always worked to my favor.

This year...my husband was collecting unemployment so our income is not very high. We qualify for EIC but it seems that my return is much higher if I don't claim the Home Office deductions but just Actual business expenses. Does this make sense? Do I HAVE to use the Home Office deduction? Also....a portion of our rent is exclusive for daycare use of the home.(we pay a higher rent so the landlord will allow me to do daycare)

Any suggestions??? Thanks

[MsCathy]

One more thing...

The DC room is completely separated n my home and never used by family.

[TomCopeland]

House expenses

You must claim home office expenses (meaning your rent, etc. for this space), even if this means getting a smaller Earned Income Tax Credit. You must also claim all other business expenses. The IRS has explicitly said this.

You can deduct 100% of the rent that is associated with this exclusive business space.


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[Little Star75]

I was told by my tax preparer that we must include the square feet used for your business including your office if its for business related.