Tax Deducted Security

04-05-2020 - Sometimes we experience surprising tax deductibles. This could range from tax deductible expenses on guard dogs to gambling losses or more. However, during the last minutes scrambles, when taxpayers start to make last-minutes frantic efforts to arrive at calculations that will maximize their refund this year, they may be disappointed to find that a home security system is not one of those qualifying items, unless a particular condition is met.

Taxpayers who use their security system to protect their home offices may be permitted to add it to their lists of deductions. For instance, if you have a separate space within your home where you conduct a home day-care business, you might be able to add it to your list of deductions.

It should be noted, however, that home office and business have to meet certain standards before security system cost deduction can be made. According to the IRS, home office deduction is only permitted; “if you use that part of your home regularly and exclusively” for business purposes under any of the following conditions:

1. A home office in a building detached from the rest of your house You’re permitted to deduct the cost of a security system protecting your workspace if it is situated in a separate building from your house. This could be in form of a detached backyard studio or a day-care centre, but is used in conjunction with your trade or business.
2. A home office within your house used as your principal place of business The IRS denotes the principal place of business to be the only fixed location in a home where most administrative activities are conducted.
3. A home office located within your house for the purpose of meeting clients Your home office may not necessarily be your principal place of business. It could be a place you use “to meet or deal with your patients, clients, or customers.”



Then, what is meant by “regularly and exclusively”?

SafeWise, a home security consumer website, explains that the phrase “regularly and exclusively” means that your workspace and living space must be separated, both in physical and functionality. This implies that family members must never use your home office for any purposes other than works related to your business. Home office should not be used for personal activities like online shopping.

In order to avoid any mix up, you should create your home office in a room assigned for business use only. In case of space limitations where you cannot get a separate room, use physical partition that is obvious to everyone to show where you work as against where other personal activities are done.

Aside from the fact that physical separation will help show that the space is used exclusively for business purposes; it will also make it easy for you to calculate your deductions. If you use the same system that protects your whole house for your home office, you will only need to deduct the portion of the security system used to protect your place of business. So, it best that you fill a worksheet that accounts for your office’s square footage compared to the rest of the house.

Lastly, it is not acceptable to use your home office occasionally or as a backup location. Rather, it should be used as an integral part of your business where you conduct regular and normal work activities.

After going through these guidelines and you’ve discovered you’re eligible for home security system deduction, it is imperative that you consult a tax professional for expert advice on the easiest and most efficient way to maximize your refund.