The clean answer
Home office planning is a facts-and-entity question. A sole proprietor may report qualifying business-use-of-home expenses differently from a partner or S corporation owner-employee.
The CPA review should start with the use of the space, then move to entity structure, reimbursement policy, expense support, depreciation, and whether simplified or actual expense treatment is appropriate.
Records to gather
- Square footage of the office and home, photos or floor plan, and a description of business use.
- Mortgage interest, rent, utilities, insurance, repairs, property tax, internet, and other potentially allocable expenses.
- Entity documents, payroll setup, reimbursement policy, and whether expenses were paid personally or by the business.
- Prior-year Forms 8829, depreciation records, and records of any home sale or improvement activity.
Common reporting differences
- Schedule C businesses may claim qualifying expenses directly on the business return.
- Partnerships often need the partnership agreement and reimbursement policy reviewed.
- S corporation owner-employees typically need an accountable-plan reimbursement approach if the company will reimburse home office costs.
- Employees generally have a different and more limited federal deduction profile than self-employed taxpayers.