Does your tax adviser know how to maximize Home-Office Deductions?
If you are a small business owner and use your part of your home for business use, you may deduct home office expenses when you file your tax return. The question you may have is probably: How do I calculate it? What are the method(s) allowed by the IRS? Well, you need to know the IRS rules and have practical tax strategies.
According to the IRS publication: “You can use any reasonable method to determine the business percentage” of your home that you use for business. - IRS Pub. 587, Business Use of Your Home (2009), p. 6.
The publication then lists two commonly used reasonable methods:
1. Gross square footage method: Divide the area used for business by the total area of your home.
2. Number of rooms method: If the rooms in your home are all about the same size, you can divide the number of rooms used for business by the total number of rooms in your home.
But when you look at IRS Form 8829, it shows only the gross-square-footage method as an option. This conflicts with the IRS instructions and its publication.
As a matter of fact, there is a third method commonly known as the net-square-footage method. In your calculation, you probably should consider using this method to maximize your home office deductions.
Now what is net-square-footage method?
The net-square-footage method is used in cost accounting. With this method, you subtract from the gross square footage the footage consumed by: outside walls, hallways, bathrooms, stairways, foyers, water heaters, and the heating and cooling equipment.
The result is your net usable square feet. This method reduces the denominator in your calculations and increases the business percentage.
As promulgated by the Cost Accounting Standards Board and in commercial real estate, the net-square-footage method is commonly used in cost accounting standards.
Government grants and contracts are governed by cost accounting standards. In its cost disclosure statement to the government for its government grants, the University of Delaware uses assignable net square footage to allocate its operations and maintenance pool, which it describes as follows:
Assignable Net Square Footage. This represents the assignable net square footage of each room. The total assignable net square footage of a building is the sum of all assignable net square feet from all rooms in each particular building.
Taking the square footage of each room in total produces the same result as excluding the hallways, bathrooms, etc.
The University of New Hampshire also uses net square footage to allocate its facility service costs. The university defines net square footage as gross square footage minus common areas such as halls, bathrooms, stairways, and foyers.
Following is an example that we can see all the three methods and compare the results. Let’s say this home has four bedrooms, three bathrooms, a kitchen, a dining room, a living room, and a family room (eight rooms—you don’t include the bathrooms).
The outside dimensions of this home measure 2,200 square feet. When you exclude the common areas, you find 1,800 net square feet. Your office occupies a room that measures 250 square feet.
Here’s a comparison of the three methods:
|
Method |
Numerator |
Denominator |
Percentage |
|
Gross square footage |
250 |
2,200 |
11.36% |
|
Number of rooms |
1 |
8 |
12.5% |
|
Net square footage |
250 |
1,800 |
13.88% |
If you just used IRS Form 8829 and simply made the computations using the form for the above home, you would have a 11.36 percent deduction.
In this example, you end up with a 10 percent greater home-office deduction with the number-of-rooms method.
Yet the net-square-footage method would give you greater deductions than both other methods in this example. Compared with the gross method, the net-square-footage method produces a 22 percent increase in the home-office deduction.
The increase means you now deduct 22 percent more of your:
- mortgage interest;
- property taxes;
- utilities;
- insurance;
- rent (if you are renting your home);
- pest control;
- maintenance and repairs; and
- depreciation.
Conclusion:
If you claim a deduction for an office in your home and you would like to increase the size of that deduction, you need to seriously consider both the number-of-rooms and the net-square-footage methods.
The net-square-footage method will always be better than the gross-square-footage method.
The number-of-rooms method can beat the other methods in the right circumstances.
Make sure that you get theoptimum deduction. Do the little calculation that it takes to see the best result.
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Ontario Human Rights+TPSB+Toronto Police Partnership-David Miller
Media advisory,
Monday, May 17, 2010, 11:50 a.m.,
St. Lawrence Hall, 155 King Street East, The Great Hall, third floor,
TPS, TPSB and Ontario Human Rights Commission
celebrate new milestone
Broadcast time: 17:00
Sunday, May 16, 2010
Public Information
416−808−7100
A major joint initiative between the Toronto Police Service (TPS), the Toronto Police Services Board (TPSB), and the Ontario Human Rights Commission (OHRC) to bring about institutional change in combating racism and discrimination celebrates a new milestone.
An event celebrating the projects completion is being held today at 11:50 a.m, at St. Lawrence Hall.
Toronto Mayor David Miller will be the keynote speaker.
The Human Rights Project Charter, launched in 2007, arose out of a need to address human rights concerns about police that were being brought before the Human Rights Tribunal of Ontario. The three−year project involved a working group of staff from each of the three organizations.
Their task was to look at human rights issues in the employment policies and
the delivery of police services. In particular, the working group examined recruitment, selection, promotion &retention, police learning, accountability and public education. A series of strategies to deal with each area was developed. The partners agree that, through research, analysis, dialogue and the exchange of new ideas, real progress has been achieved in all these areas.
“This unique project has enabled the Toronto Police Service to learn a great deal about how it can deliver its services in a fair, equitable and bias−free manner and respond better to, and reflect, the communities it serves,” Chief Bill Blair said. “I am confident that the relationships we have established through this partnership will be long−lasting as we continue to work
together to provide quality policing services to all Torontonians.”
Toronto Police Services Board Chair Alok Mukherjee said: “We are proud of this Project Charter and the cooperative way in which we have all established productive working relationships with the Ontario Human Rights Commission. Our efforts through this joint venture will ensure that the Toronto Police Service continues to provide effective policing that is accountable and sensitive to community needs,” Mukherjee said. “The benefits of this
project will no doubt continue to be felt for years to come.”
Chief Commissioner Barbara Hall said: “I am delighted with the many positive results that have come out of this unique partnership project and the constructive steps that the Toronto Police Service and the Toronto Police Services Board have taken to address human rights concerns.
While there is still work to do, this project serves as an ideal example of how such partnerships can help others also create a culture of human rights within their organizations.”
Participants will be available for interviews after the event.
For more information, please contact:
Sandy Adelson − Senior Advisor for Policy and Communications
Toronto Police Services Board
Tel: 416−808−8090
Afroze Edwards − Senior Communications Officer
Ontario Human Rights Commission
Tel: 416−314−4528
Inspector Anil Anand
Public Information
Tel: 416−808−7100
George Christopoulos, Public Information, for for the Ontario Human Rights Commission
Video by Cst Scott Mills, Toronto Police Service Public Information Unit Social Media Relations Officer
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Media advisory,
Monday, May 17, 2010, 11:50 a.m.,
St. Lawrence Hall, 155 King Street East, The Great Hall, third floor,
TPS, TPSB and Ontario Human Rights Commission
celebrate new milestone
Broadcast time: 17:00
Sunday, May 16, 2010
Public Information
416−808−7100
A major joint initiative between the Toronto Police Service (TPS), the Toronto Police Services Board (TPSB), and the Ontario Human Rights Commission (OHRC) to bring about institutional change in combating racism and discrimination celebrates a new milestone.
An event celebrating the projects completion is being held today at 11:50 a.m, at St. Lawrence Hall.
Toronto Mayor David Miller will be the keynote speaker.
The Human Rights Project Charter, launched in 2007, arose out of a need to address human rights concerns about police that were being brought before the Human Rights Tribunal of Ontario. The three−year project involved a working group of staff from each of the three organizations.
Their task was to look at human rights issues in the employment policies and
the delivery of police services. In particular, the working group examined recruitment, selection, promotion &retention, police learning, accountability and public education. A series of strategies to deal with each area was developed. The partners agree that, through research, analysis, dialogue and the exchange of new ideas, real progress has been achieved in all these areas.
“This unique project has enabled the Toronto Police Service to learn a great deal about how it can deliver its services in a fair, equitable and bias−free manner and respond better to, and reflect, the communities it serves,” Chief Bill Blair said. “I am confident that the relationships we have established through this partnership will be long−lasting as we continue to work
together to provide quality policing services to all Torontonians.”
Toronto Police Services Board Chair Alok Mukherjee said: “We are proud of this Project Charter and the cooperative way in which we have all established productive working relationships with the Ontario Human Rights Commission. Our efforts through this joint venture will ensure that the Toronto Police Service continues to provide effective policing that is accountable and sensitive to community needs,” Mukherjee said. “The benefits of this
project will no doubt continue to be felt for years to come.”
Chief Commissioner Barbara Hall said: “I am delighted with the many positive results that have come out of this unique partnership project and the constructive steps that the Toronto Police Service and the Toronto Police Services Board have taken to address human rights concerns.
While there is still work to do, this project serves as an ideal example of how such partnerships can help others also create a culture of human rights within their organizations.”
Participants will be available for interviews after the event.
For more information, please contact:
Sandy Adelson − Senior Advisor for Policy and Communications
Toronto Police Services Board
Tel: 416−808−8090
Afroze Edwards − Senior Communications Officer
Ontario Human Rights Commission
Tel: 416−314−4528
Inspector Anil Anand
Public Information
Tel: 416−808−7100
George Christopoulos, Public Information, for for the Ontario Human Rights Commission
Video by Cst Scott Mills, Toronto Police Service Public Information Unit Social Media Relations Officer
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MIKE ARROYO DENIES FIRST GENTLEMAN’S LINK TO SMARTMATIC AND TIM *2010 POLL AUTOMATION BID WINNERS*
(Update 2) Poll automation back on track
——————————————————————————–
By Aries Rufo, abs-cbnNEWS.com/Newsbreak | 07/03/2009 4:30 PM
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MANILA – Commission on Elections (Comelec) chair Jose Melo was all smiles after emerging from a 3-hour closed-door meeting with officials of the Barbados-based Smartmatic and Filipino firm Total Information Management (TIM) Friday afternoon.
How do you judge the way we look? Melo asked the reporters who staked out of the meeting.
Everything seems to be on track again. We are back to automation, said Melo, whose smiles were a far cry from his anxious look days ago.
Faced with threats of criminal and civil suits, TIM blinked and agreed to proceed with the election project with its foreign partner.
Asked how Smartmatic and TIM were able to settle their differences, Melo refused to elaborate, asking the media to respect the truce between the two partners.
However, he pointed out that TIM president Jose Mari Antuñez allowed the greater interest of the country to prevail.
He added: Whatever internal arrangement (they have), its between them.
Incorporation papers
The poll chief said TIM and Smartmatic are in the process of finalizing their joint venture incorporation papers, and are set to file these with the Securities and Exchange Commission (SEC) on Monday.
He said Comelec and the incorporated Smartmatic/TIM joint venture might sign the contract for the poll automation project by Friday next week.
The elections technology provider and TIM bid P7.2 billion to automate the polls.
Safeguards secured
TIM returned to the negotiating table with Smartmatic and the Comelec after it secured the necessary “safeguards” for the poll automation project.
TIM President Jose Mari Antuñez confirmed that they were able put in place some safeguards in its joint venture partnership that proved to be the turning point in its dispute with Smartmatic..
He refused to be specific, saying that he is bound by a confidentiality agreement until after the contract with the Comelec to provide electronic counting machines is signed.
Antuñez said he will tell the truth in the Senate hearing scheduled on Monday.
If they ask, I cannot lie, Antuñez said, when asked if he was willing to spill the beans on the real circumstances of its dispute with Smartmatic. The dispute almost railroaded the automation project.
Reports obtained by abs-cbnnews.com/Newsbreak showed that TIM sought to back out from the project after sensing that powerful people were trying to dip their fingers in the project.
Smartmatic and TIM won the right to provide electronic voting machines for the countrys first nationwide automated polls in 2010.
In jeopardy
The automation project was put in jeopardy after TIM announced last Monday that it was withdrawing from its deal with Smartmatic. TIM had dragged in signing the incorporation documents to be registered with the Securities and Exchange Commission.
The incorporation of the joint venture is one prerequisite before the Comelec enters into a contract with Smartmatic and TIM.
The documents are required by the Comelec as proof of the joint ventures legal personality for the contract signing.
TIM, which would have a majority or 60 percent stake in the venture, had wanted more control in the financial and technical aspect of the automation project.
TIM officials had alleged that despite Smartmatics minority, or only 40 percent, stake in the venture, the foreign partner would have more control over the partnerships affairs.
Without the proper check and balance, the groundwork for a possible electronic fraud is laid out, TIM sources said.
Smartmatic had insisted that the core issue is money. Lawyers of Smartmatic told Makati Rep. Teodoro Locsin that TIMs Antuñez had demanded P500 million from Smartmatic.
TIM had denied the allegation.
But as far as the poll body is concerned, it was TIM that was the guilty party. It threatened to file criminal and civil charges against TIM for backing out of the landmark project.
More involved
If the corporate dispute between Smartmatic and TIM almost wrote finis to the Comelecs most ambitious project, it also had its silver linings.
During its meeting with Smartmatic and TIM, the Comelec en banc reasserted its authority to be on top of the automation project, diminishing the possibility of Smartmatic running the entire show in the implementation of the automation.
We will have control over the entire operation. We will have our project management team, and this will be the one to give direction and orders, Melo said.
Smartmatic has been hounded by controversies in election projects it has implemented elsewhere. Its automation project in the Philippines is its biggest contract so far.
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