In my previous post I listed the requirements you need to meet in order to qualify for the home business deduction on your 2011 tax form.
Remember: You must be able to show that you use your home as your principal place of business. This can be accomplished by sanctioning off a portion of your house, condo, mobile home or apartment for business purposes only. You can’t use your workspace to host poker games or scrapbook crops on the weekends; rather, the space must be used exclusively and regularly for business.
However, there are two exceptions to this rule. According to the IRS, if you use part of your home to store inventory or you run a qualified day care facility in your house you don’t have to meet the aforementioned requirements.
Keep in mind that if you fail to meet the home business deduction requirements, you can still deduct ordinary business expenses on your 2011 tax form. Legitimate expenses include office supplies, long-distance phone calls, a separate business phone line, a fax machine that is used for business purposes only, or a lamp that is used to illuminate your workspace. The home business deduction covers expenses incurred to actually maintain your company, such as utilities, rent, insurance, mortgage interest, real estate taxes, and repairs. So, if you have an office outside of your home you won’t qualify for the deduction.
Also, in regards to storing samples or other work-related products, you have to set aside a specific area in your home for these items, be it a spare room, closet or the garage. According to the tax law, in order to qualify for the home business deduction, you may use the storage space for personal items, as well as work-related ones, as long as the latter is stored there on a regular basis.