A home office will meet the principle place of business test if it is used exclusively and regularly to conduct administrative or management activities, and you can show there is no other fixed location where these activities can be performed for your business. Generally, if you are an independent owner/operator distributing product, and there is no office space provided to you, a home office deduction is allowed.

When you started with DSA you received a set-up sheet to complete regarding your home. If you move or renovate your home, you will need to complete this form again with the changes. An extra form can be found in the notice of change section of this workbook. This will enable DSA to calculate the percentage of your home used for business and the depreciation allowable. The office in the home deduction is available to you whether you own or rent your home. Each month the Home Office Deduction Expense Record total should be reported to DSA on the appropriate line on the bottom of your recap statement. Any repairs to your home can be included on this form. If the expense is strictly for your office, it can be paid for through the business account and listed with Misc. Office Supplies on the recap statement. This would include office cleaning supplies, etc.

Your Home Office Deduction Expense Record form asks for all of the information you need to retain for tax purposes. To the right, you will find a sample Home Office Deduction Expense Record form filled out for a typical month.

(NOTE: Any depreciation taken on your home may be recapturable when you sell the home. Additionally, that percentage of your home that you considered to be your home office, does not apply under the current tax law that allows you to exclude up to $500,000 (if married, $250,000 if single) of your gain when you sell your house. The gain that relates to the percentage of your home that is used as a home office must be recognized as capital gain.)

(NOTE: When you have finished each month, remember to place your completed Home Office Deduction Expense Record form with your other DSA Records and take a new form for the following month.)