Deducting Your Home Office Furniture - 3 Questions You Need to Ask Yourself First

When you have a home business, doing your taxes can get a little tricky. But as long as you are well-informed as to what you can and cannot do, you will be able to take all of the tax deductions that you're legally entitled to. After all, there is no reason to leave money sitting on the table if you don't have to! So, how can you tell if your home office furniture is tax deductible? Start by asking yourself these 3 questions:

1. Is my home office furniture really only used for business purposes?

In order to legally take your home office furniture as a tax deduction, you can only use it for business purposes. In the eyes of the IRS, this means 100% of the time. If you bought a couch so that clients have a place to sit - but also for guests to sleep on when they spend the night - then your couch will not count as a legitimate home office tax deduction. Or, if you bought a bookcase - but your kids store their books on it, too - it's not really a business purchase.

2. Have I kept good records that will help me prove my case, if I ever need to?

Your taxes don't end as soon as you mail in your return. Down the road, you could get audited. Then, it will be up to you to convince the IRS that you did everything by the book. The only way to do that is to hang onto as many records as you can. That way, if it ever comes down to it, you can prove exactly how much you spent on home office furniture - and what exactly it was that you bought.

3. Do my home office furniture purchases make sense?

If your purchases and deductions are ever called into question, everything should make common sense. For example, if you deduct the price of a sofa bed as home office furniture, the IRS may wonder why a regular couch wasn't sufficient. Do you have clients spend the night, or are you simply trying to get away with buying a new sofa bed for your guest room and trying to deduct the cost? If your deducted purchases defy common sense, you may very well be asked to answer for them. Before you deduct anything, make sure that the explanation behind will stand up.