So you’ve started a cottage goods business and need a home office but you are on a budget. Two filing cabinets with a door placed on top makes a quick and inexpensive desk. Instant home office!
If you have a home office that is used exclusively for business but have not taken your deduction because it was too complicated to track and calculate, try using the “safe harbor method”.
Simply take the square footage of your home office and multiply it by $5. Easy right? You can do this up to 300 square feet for a maximum deduction of $1500 per year.
There are pros and cons (of course) to using this method:
- Pro: If you are a homeowner, you do not have to recapture the depreciation on gain if you sell your home.
- Con: Amount in excess of gross income limitation may not be carried over and loss carryover from use of regular method in prior year may not be claimed.
If you are looking for ideas on home based business, check out my blog on starting a Cottage Goods Business
Want to know more about homesteading and farming tax deductions? Check out What is a farming business?