Q: Can I still deduct my home office expenses if I have an S Corporation?

Yes, but it works differently compared to being self-employed. S Corporation owners can't directly claim a home office deduction on their personal returns. Instead, they must use an accountable plan to get reimbursed for home office expenses like rent, utilities, and internet.

The accountable plan allows the S Corp to reimburse the employee (you) for business expenses incurred, including a portion of your home office costs. The corporation deducts the reimbursement as a business expense, while the owner does not report the reimbursement as income on their personal return, keeping things tax-free.

How does it work?

1. Accountable Plan: The S Corporation must have a written accountable plan, allowing reimbursements for home office use.

2. Reimbursement Process: Submit an itemized expense report to the S Corp, detailing the percentage of home costs (utilities, mortgage interest, etc.) used for business. This percentage is based on the square footage used for your office relative to your home.

3. Tax Reporting: The S Corporation deducts the reimbursed expenses on its corporate tax return, and since it's reimbursing you, the owner does not report this as income on their personal tax return. This avoids double taxation.

Key Points to Remember:

• Ensure the home office is used exclusively and regularly for business.

• Maintain detailed records to substantiate the expenses.

• Without an accountable plan, these expenses would not be deductible under an S Corporation structure.