You can claim this deduction only if you use a part of your home regularly and exclusively:
- As your principal place of business for any trade or business.
- As a place to meet or deal with your patients, clients or customers in the normal course of your trade or business.
Generally, the amount you can deduct depends on the percentage of your home that you used for business. Your deduction will be limited if your gross income from your business is less than your total business expenses.
The main exceptions that let you withdraw money early without penalty are as follows:
- Qualified retirement plan distributions if you separated from service in or after the year you reach age 55 (does not apply to IRAs).
- Distributions made as a part of a series of substantially equal periodic payments (made at least annually) for your life or the joint lives of you and your designated beneficiary.
- Distributions due to total and permanent disability.
- Distributions due to death (does not apply to modified endowment contracts)
- Qualified retirement plan distributions up to (1) the amount you paid for unreimbursed medical expenses during the year minus (2) 7.5% of your adjusted gross income for the year.
- IRA distributions made to unemployed individuals for health insurance premiums.
- IRA distributions made for higher education expenses.
- IRA distributions made for the purchase of a first home (up to $10,000).
- Distributions due to an IRS levy on the qualified retirement plan.
- Qualified distributions to reservists while serving on active duty for at least 180 days.
- If you make a cash donation, you must have a bank record or written communication from the charity showing the name of the charity and the amount of the donation. A bank record can be the cancelled check or a statement from a bank or credit union – so long as it lists the charity’s name, the date, and the amount of the contribution. Personal records such as bank registers, diaries and notes are no longer considered acceptable proof of contributions.
- Any used items (such as clothing, linens, appliances, etc.) must be in good condition and may only be deducted at the price you could reasonably ask for the item in used condition. For contributions worth $250 or more, you must have a written receipt or letter from the organization. For contributions worth $500 or more, you must file Form 8283 (Noncash Charitable Contributions) and attach it to your Form 1040.
Remeber all contributions must be made to qualified charitable organizations.
There are many sections to this new law and we know all of them. If you have any questions on how the ACA effects you or your business just ask us.
HAVE A QUESTION? JUST ASK US!
Fill out the form below and we can assist you with any questions you may have.