Home Office Exclusivity

Puneet from Wisconsin has two questions on home office. I thought it best to look at each individually.

Here goes ... Puneet asks:

(1) I am a full-time doctoral student and also a part-time computer consultant. All of my consultancy work is contract-based projects. While I study as well as work out of my home-office, I do all my work out of my home-office exclusively (that is, I don't do my work anywhere else but in my home-office, but I also study in my home-office because my work is not full-time).

I have many business-use facilities such as additional phone line, software, a computer that I use for my business as well as my research, etc. Can I take a home-office deduction? I started my business last year Fall, so I didn't make any money last year, but this year looks good.

Here's the killer of his home office deduction: I study as well as work out of my home-office.
The "exclusivity" aspect of home office is not that it's the only place you do your self-employed work. It means that you don't do anything else there. Your indie venture may be done in more than one place, but your home office may house only your indie work. You may run two of your home businesses from one home office but you may not do your schoolwork there.


(2) My wife is a full-time artist and art-teacher, and she uses another portion of the house for her art-studio and for teaching art. While she has exclusive, regular, and principal use of her space for her work, we share some facilities such as Internet connection, laser printer, Quicken (I keep her records). We file our taxes jointly. Can she also take a home-office deduction for her portion of the office? Many thanks in advance.

If Puneet's wife does only her art work in her portion of the house, she gets a home office deduction. I assume Puneet's printer, etc is in his home office. His wife may use it. That does not negate her deduction. It does negate his. But, he doesn't get one anyway because he does his schoolwork there.

I'm working on a publication explaining the most tax advantageous way for husband and wife to each have an indie business. Watch for the announcement of publication this summer.

Puneet, hope this is clear. Please let me know if it is not.

May 2007 be a money-making year for you.

Best, June