Question

If i use my garage to store power tools for my business, can i take a deduction? Would this be considered home office or where do i take the deduction?

Forum|Forum|6 years ago
June 6, 2019
2 replies
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TurboTax Home & Biz Windows

Unfortunately, no. While one of the acceptable business uses of the home (see below) is use for "certain" storage on a regular basis, the tax regulations limit this to the storage of inventory or product samples.

To qualify to deduct expenses for business use of your home, you must use part of your home:

Exclusively and regularly as your principal place of business;
Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business;
In the case of a separate structure which is not attached to your home, in connection with your trade or business;
On a regular basis for certain storage use;
For rental use (see Pub. 527); or
As a daycare facility.

For more information, please see IRS Pub. 587 Business Use of Your Home.

B

builder tom

I've read that publication, and it is beyond confusing as to what is allowable and to what degree.

Logically, it makes sense to me that i should be able to have some degree of deduction for having a third of my detached garage dedicated to the storage of work tools and materials that are necessary for me to earn an income in my field. Not everything could possibly fit in my truck, and storing things outside would eventually destroy them. Thus, a secure storage facility is an essential component of my business and one that carries its own expense.

The IRS publication seems to agree with me:

"You can deduct expenses for a separate free-standing
structure, such as a studio, workshop, garage, or barn, if
you use it exclusively and regularly for your business. The
structure does not have to be your principal place of busi-
ness or a place where you meet patients, clients, or cus-
tomers.

But there does not seem to be any clear way to do this deduction on turbotax.

R

RobertB4444

The IRS allows you to deduct your shop and your tools and everything only if you own a business.

If you work for someone and they pay you then the deduction for tools and shop and everything is for the business owner who pays you. They could reimburse you for those costs and deduct the reimbursement paid to you from their taxes. But as an employee you can't deduct those things at all.

You used to be able to. But that deduction was ended by the Tax Cuts and Jobs Act in 2017. You can still deduct it on your state return in Alabama, Arkansas, California, Hawaii, Maryland, Minnesota, New York and Pennsylvania.

But otherwise it is not deductible on your federal return at all.

@builder tom

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O

Opus 17

In the case of W-2 employees, the deduction was eliminated in 2017 (it might be back in 2026, but no one knows for sure). You can still take the expense deduction in some states.

For self-employed, a home office deduction is allowed, subject to the rules in publication 587.

If you are NOT using the space for storage of inventory, then you must meet the regular and exclusive use rules.

You could dedicate 1/3 of your garage to exclusive use as a work space, but is it your regular work space? That's what might get you in the end. Where are you working, if not your garage? If you have a regular workspace someplace else, and use your home to store specialty tools that you don't need every day, or that you store at home for security, then your home is not your regular place of work, even if you use that portion of your garage exclusively for storage of work tools.

https://www.irs.gov/publications/p587

B

builder tom

It's definitely a regular and exclusive space for tool and materials storage, but as for having a regular workplace, as a contractor, there really is no such thing. I can be working at one jobsite for months, or be at ten different ones in the course of a week.

If this is indeed an allowable deduction, how can i enter it on turbotax?

For as many people as there are working in construction who have dedicated storage spaces for tools and materials, this seems like quite a gross oversight for the IRS to not have clarified and streamlined this.

(yeah, yeah, i know ...the IRS isn't exactly known for clarity and simplicity ...hehe)