Covid-19 has sent many workers home, scrambling to find space to set up a home office.    Are you in a unused bedroom?   Are you in the basement?  I’ve even heard of some people setting up in the garage too!  Many times it’s right along side of your children’s e-learning stations.  Does your work at home space qualify for a home office IRS tax deduction? 

To qualify for a home office tax deduction on your tax return, the IRS states that your space must be regular and exclusive use.    Setting up in your dining room would not count.  A back office or unused bedroom (without a bed) would work. 

Therefore, the office space must also be your principal place of business. If you conduct business at another location outside of your home, but you also use your home substantially and regularly to conduct business, you may qualify for a home office deduction.

Deductions

Generally, you can calculate what percentage of the square footage belongs to the office, and divide expenses accordingly.  You can deduct actual expenses for the office. Among these, you can include a proportional share of utilities, upkeep, insurance, taxes, home mortgage interest etc.   Before delving into these deductions, you should contact a qualified tax attorney or accountant to properly assess what qualifies for a deduction.

As always, to read more, visit the home office tax deduction page on the IRS website. 

IRS Debt and Bankruptcy

Furthermore, you should help avoid tax liabilities that could drive you into a bankruptcy.  Remember, under the bankruptcy code, income taxes that are less than 3 years old are not dischargeable in a chapter 7 bankruptcy.  You can repay them though in a chapter 13 bankruptcy case however.   If you are in need, contact me for a free bankruptcy evaluation.    

Finally, I am offering free phone and zoom consultations to help protect your health and safety, and the Bankruptcy Court is allowing E-signatures and telephonic hearings to help protect the health of filers, attorneys and the court staff. 

The post Does your work at home space qualify for a home office tax deduction with the IRS? appeared first on Chicago Bankruptcy Lawyer.

Do you save your old returns?  If so, good.  Experts say to hold on to your tax returns for 10 years. That’s a lot of paper if you don’t scan them in or get digital copies of your returns from your accountant, tax lawyer or tax preparer.

Luckily, if you did not save your copies, the IRS can get these to you.

Good news!  You can order the last 4 years of tax returns directly from the IRS. Your trustee will not usually want to see your state tax returns.

The best part about it? IT’S FREE!

Order your returns from the IRS here

First off, tax returns are needed to properly fill out your chapter 7 and chapter 13 bankruptcy petition.   Get these to your bankruptcy lawyer before you file your bankruptcy.  They will forward these to the trustee in your case.

Next, be sure to list any income tax liability on schedule E of your bankruptcy petition schedules if you owe back taxes. Some income tax is dischargeable in bankruptcy, if you can meet several of the US Bankruptcy code’s loopholes. As always, contact your bankruptcy attorney (hopefully it’s me!) to review the dischargeability rules for income taxes that you may owe. Timing is everything. Thankfully, we have tools to help you determine the best time to file your bankruptcy petition.   You must schedule income tax liability if you hope to discharge it.

Furthermore, if you haven’t filed returns, you should discuss this with your lawyer too. Most likely, your bankruptcy attorney will tell you to file your tax returns.  Likewise, if you are not required to file for a certain year, your lawyer should prepare an affidavit for you to get notarized.   The affidavit states that you are exempt from filing for the tax year.

Finally, I do not practice tax law;  I only focus on bankruptcy law.  For that reason,  be sure to talk with a tax attorney to properly advise you if you have to file a tax return in any given year.

The post Tax returns – How to order tax returns from the IRS for your bankruptcy case appeared first on Chicago Bankruptcy Lawyer.