Below is an IRS example of a home office. My situation is exactly like Paul's below except I work at 1 local hospital, not 3. Am I elegible to deduct car expenses when I travel from my home office to the 1 local hospital? Example 3.Paul is a self-employed anesthesiologist. He spends the majority of his time administering anesthesia and postoperative care in three local hospitals. One of the hospitals provides him with a small shared office where he could conduct administrative or management activities.Paul very rarely uses the office the hospital provides. He uses a room in his home that he has converted to an office. He uses this room exclusively and regularly to conduct all the following activities.Contacting patients, surgeons, and hospitals regarding scheduling.Preparing for treatments and presentations.Maintaining billing records and patient logs.Satisfying continuing medical education requirements.Reading medical journals and books. Paul's home office qualifies as his principal place of business for deducting expenses for its use. He conducts administrative or management activities for his business as an anesthesiologist there and he has no other fixed location where he conducts substantial administrative or management activities for this business. His choice to use his home office instead of the one provided by the hospital does not disqualify his home office from being his principal place of business. His performance of substantial nonadministrative or nonmanagement activities at fixed locations outside his home also does not disqualify his home office from being his principal place of business. He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home.

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Home Office & Deducting Car Expenses 1099 Sole Proprietorship

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October 23, 2018
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Below is an IRS example of a home office. My situation is exactly like Paul's below except I work at 1 local hospital, not 3. Am I elegible to deduct car expenses when I travel from my home office to the 1 local hospital?

Example 3.

Paul is a self-employed anesthesiologist. He spends the majority of his time administering anesthesia and postoperative care in three local hospitals. One of the hospitals provides him with a small shared office where he could conduct administrative or management activities.

Paul very rarely uses the office the hospital provides. He uses a room in his home that he has converted to an office. He uses this room exclusively and regularly to conduct all the following activities.

Contacting patients, surgeons, and hospitals regarding scheduling.
Preparing for treatments and presentations.
Maintaining billing records and patient logs.
Satisfying continuing medical education requirements.
Reading medical journals and books.

Paul's home office qualifies as his principal place of business for deducting expenses for its use. He conducts administrative or management activities for his business as an anesthesiologist there and he has no other fixed location where he conducts substantial administrative or management activities for this business. His choice to use his home office instead of the one provided by the hospital does not disqualify his home office from being his principal place of business. His performance of substantial nonadministrative or nonmanagement activities at fixed locations outside his home also does not disqualify his home office from being his principal place of business. He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home.

Carl11_2

Here's the deal. The way the IRS words the questions on this can be misleading if you don't pay attention to detail. So I'm going to paraphrase the two questions that matter here.

- Percentage of time the home office is used for business --- This *MUST* be 100% (one hundred percent). You may only use that home office 1 hour a week. But for that 1 hour it's business use, and nothing else. No kids doing homework or paying video games in that office. Strictly business. The home office must be 100% business use. Anything less, and you do not qualify for the home office deduction.

- Percentage of business conducted in the home office --- While it's possible, it's rare for this to be 100%. You conduct a majority of your business outside of your home. So your percentage of business conducted in the home office can't possibly be 100%.

So the 100% business use of the home office for business only qualifies you for the deduction. While the percentage of business actually conducted in that home office is but one of the factors used to determine how much of a deduction you qualify for.

B

bpittman201Author

Thanks Carl. Am I elegible to deduct car expenses when I travel from my home office to the 1 local hospital?

Carl11_2

If you are self-employed and the location of that home office is registered as your primary place of business, then no problem. Now if you are just a sole proprietorship, that could be (and usually is) a problem to prove. That's because many locales and states don't require a "formal" registration of a sole proprietorship. But if your business is registered as an LLC, then you are registered at the state level. With LLC registration if your home address is registered as your primary place of business, then no problem. But do be careful with this. If you spend 39 hours a week at the hospital, and 1 hour a week in the home office, the IRS won't buy it. A "majority" of your business work would need to be in the home office. How does the IRS define "majority"? I don't know. But I can't see less than 50% being considered a majority.

I'm self-employed and have a home office also. I'm a registered LLC but can't use my home address, because we have zoning laws. My property is not zoned for business use. Therefore I rent a mailbox downtown from a business that rents mailboxes, and their location "is" zoned for business use. So my mailbox is my "official" location of my business.

As for my truck, I have a truck that is 100% business use only, and nothing else. Any time my truck leaves the driveway, it's on a business call. If I have to leave to go anywhere else for any other reason, I use the car. Since my truck is 100% business use and I can prove it with detailed mileage records, I've never had a problem and even breezed through an audit of my business income/expenses back in 2008, because of those detailed records.