Tax Answers

March 26, 1994

Here is an answer from members of the Maryland Association of Certified Public Accountants to a reader's tax question. The Sun will publish answers through April 15.

Q: I am a sales rep for an area bank. I currently work out of my home where I have a small office equipped with a desk, a dedicated fax line, and a business phone line. Can I take a deduction for a home office? What are the rules? How much can I deduct?

A: Each item must be looked at separately. Ordinary and necessary business expenses for the dedicated fax line and business phone are deductible. To deduct home office expenses, such as depreciation, a portion of the home mortgage interest and electricity, you must use part of your home exclusively and regularly as your principal place of business. Two primary factors in determining whether the home office is your principal place of business are:

1. Relative importance of the activities performed at each business location.

2. The amount of time spent at each location. For example, spending an average of 30 hours a week making sales calls by phone or mail from the home office and spending 12 hours a week at other business locations would generally support the proposition that the home office is the principal place of business.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. Consult with a tax adviser for specific advice.

To ask a tax question by phone, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll County 848-0338. Using a touch-tone phone, enter 6120 after the greeting.

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