Tuesday, February 27, 2007

Home Studio Exclusivity

Dear June,

I heard you speak at the NM Committee of Women in the Arts last spring and I bought your book, Self Employed Tax Solutions. Your book has been very helpful to me.

I have a question that I hope has a simple answer. I have never taken a home studio/office deduction on past advice from accountants. I would like to take that deduction this year, but am unclear if I really meet the requirements. I have a room in my apartment that is used exclusively for my painting. It's the only place I paint other than when I go outdoors to locations for plein air painting. So it's exclusive and it's regular use. However, I don't do my bookkeeping there (I do that in my office area that is not used exclusively as a business office) and I don't meet clients there since I normally sell out of shows or galleries. Can I still take the studio as a deduction?

Also, while I am doing my best to sell my work and earn a profit, I have yet to do so. I believe I would be able to prove my painting is not a hobby. Does that have any bearing on a home studio deduction?

Thank you for your reply.


Hello Lee,

Yes, you have a legitimate deduction for home studio. You may be confusing the meaning of "exclusive use." in this situation." Exclusive simply means you cannot do anything else in the area you use for your business -- in you case, painting. It does not mean that you must do all your business -- all your painting and paperwork -- in that area. You may have more than one business work area. All are deductible as long as they are exclusive.

Because you don't yet have any profit only some of your home studio expenses will be deductible now. Others will be calculated and put on hold to be used against future income.

By the way, the accountants you've been dealing with are not unusual. So many out-of-touch tax professionals tell indies not to take a deduction for home office or studio expense. Those same accountants would never tell the local car fix-it shop not to deduct the repair shop. I find it infuriating. When that happens, I hear the tax pro saying: "You're not a real business. " Get away from that kind of accountant as quickly as you can.

Here's some columns to give you more info on home office:
It's tax time so ... beware of bad advice from the real-life Sammy Segar, CPA
Home Studio



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