I own a business and I use a portion of my home as office space. Utilities are tax-deductible, but the electric bill comes in my mother’s name. My Question is this: Am I able to deduct that expense if can provide proof that it was paid for by me and that it was for electricity at the address that the home office is located? I understand how to calculate how much the deduction amount would be for, but I just wanted to make sure I could.
Thanks!
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Your mother is the one responsible for paying the electric bill, so you could not deduct it. Can’t you get that bill in your name? Or, if the house is your mother’s pay her rent that includes utilities and deduct that (although your mother will now have rental income).
As long as you have paid the bill, you can deduct the expense, but only for the % that the home office is in relation to the house. If the home office is 10% of the house, then you can expense 10% of the utilities.
It is one of those gray areas of the tax business. Although the utilities are under your mother’s name, I imagine that you are living at the place of residence and paying some of the expenses. If you can provide proof of payment (canceled checks, money order, on-line printout, etc.) then you should be OK. Also, realize that the utilities are pro-rated for the amount of space – meaning if the office only represents 10% of the total home space, then you can only deduct 10% of the utility costs.
For any home office expense, you can only deduct the portion of the expense that is for the part of the house that is regularly and exclusively used for business. Even if the bill was you your name, you could not deduct the entire part that you paid. If it is not possible to determine what portion of the real estate tax, utility, etc., bills are for the home office and what portion are for the rest of the house, you find the total and then divide by the number of rooms in the house (if they are the same size) or by the number of square feet in the house (if the rooms are different sizes), and then multiply by the size of the office (in either rooms or square feet, whichever applies).