With the tax return deadline closing in, here are a few, last-minute ideas for deductions that you may not have considered.
1. Home office deduction loophole
Sure, most agents who work from home are aware of this deduction. But did you know that if you also work from your broker’s office you might still qualify for the deduction?
You’ll need to meet “the principal place of business test” to qualify and you can find this test online at Investopedia.com.
In a nutshell, the office in which you perform recordkeeping and bookkeeping is typically considered your principal place of business. If you pay business-related bills from home, then your home office will likely be considered primary even if you also work from your broker’s office.
2. It’s time to put your kids to work
Even a younger child can be put to work in your home office. Dusting is actually fun for them. The older your child, the more tasks you can find for them:
- Cleaning your signs
- Mowing lawns, pulling weeds, and more at your vacant listings
- Data entry into your CRM
- Cleaning your office
- Helping to set up an open house
- Shredding paperwork
- Refilling the flier boxes at your listings
- Stuffing envelopes
- Addressing outgoing mail
“… you want to give them something that’s reasonable for them to do based on their age, but also substantial enough to justify paying them a decent wage that’s going to really make a difference on your return,” suggests Kesha, CPA and tax coach and owner of The Millennial Taxpert.
It’s completely legal to hire your children to do many tasks that are considered jobs by the IRS. “… when it comes to family-owned businesses, the Fair Labor Standards Act doesn’t have an age limit or a maximum number of hours a child can work—it just prohibits hazardous jobs,” according to Kenji Asakura, MD and Letizia Alto, MD at semiretiredmd.com.
You will find additional information about the home office deduction online at irs.gov.
The IRS also offers a thorough walkthrough about hiring your children.
We recommend that you run these tax deduction strategies by your tax preparer or accountant.
Disclaimer: The aforementioned information is for general informational purposes only. We are not financial or tax professionals and urge you to seek the services of a licensed tax professional.
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