So maybe you read this post about home offices and you are hoping you can write off your S Corporation's home office since it is based out of your home. If done correctly then you should be able to take advantage of this deduction.

The way to handle this is to have the S Corporation reimburse the shareholder directly for the actual home office expenses (calculated the same way a sole proprietor would, allocated by square footage). The S Corp. shows the office expense on it's income statement. This expense then flows through to the shareholder through the corporation's K-1. This needs to be done under an accountable plan, so you can't just give yourself a set amount each month. It needs to be based on and supported by documented actual numbers.

Don't be tempted to have the corporation rent the office space from you either. This is an area of the tax law where the IRS will allow the rental deduction on the corporate books, and the shareholder reports the rental income on Schedule E. The deductions allowed on Sch. E are limited because of the employee/employer relationship. Only mortgage interest, real estate taxes, and casualty losses are allowed as deductions under section 280 A (c) (6) of the code. These expenses were already deductible, so the IRS has limited all other operating expenses like depreciation, utilities, HOA dues, repairs, etc. Because of this limitation I do not recommend this scenario. You are just creating extra headache for yourself with no real benefit.

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