As a self-employed worker or independent contractor, the IRS allows you to claim your home office as a deduction on your federal tax return. The federal government also permits you to deduct the costs of making purchases to furnish your office. You have a couple of options in deciding how you want to claim your office furniture tax deductions. Each choice carries a different benefit depending on how much money you've spent on furniture during the year.
Home Office Deduction Rules
To qualify for an IRS tax deduction on your office furniture purchases, your home office must first meet the federal agency's tax requirements as a regular place of business. According to the IRS, you must use the space in your home routinely and exclusively for business purposes to gain the home office deduction. This means you can't put a desk in your bedroom, call it your office and expect the IRS to allow you take a home office deduction. You must also show that your home office is the principal place of business for your particular career. If you regularly use another location to operate your business, the IRS may reduce or eliminate your ability to claim the deduction.
Home Office Purchases
The IRS allows you to claim deductions for purchases of furniture, including lamps, desks, chairs and filing cabinets, needed to furnish your home office as a primary place of business. You may also take furniture deductions specific to your profession that other professions may not need in a home office. For example, a psychologist may purchase a couch for clients to sit on as part of a home office or a massage therapist may purchase specialized massage chairs for clients to use.
Furniture Deduction Options
You have two options when choosing deduct your furniture purchases from your federal tax return. You may choose to either claim 100 percent of the purchase price in a single tax year or claim depreciation over a maximum seven-year period. Claiming the purchase in a single year is ideal for lower-cost purchases of furniture, while the depreciation method allows you to recoup the price of higher-ticket furniture items over time. The IRS requires you to use the Modified Accelerated Cost Recovery System for purchases deducted using the depreciation method.
Itemizing Your Deductions
Deducting your office furniture purchases for your business requires you to itemize all your deductions for the given tax year. Keep detailed records of your business purchases, including copies of canceled checks and invoices, to present to the IRS along with your tax paperwork at the end of the year. Failing to provide evidence of your purchases to justify your deductions could trigger an expensive IRS audit or at the very least require you to answer several stern letters from the tax agency in order to avoid a full investigation.
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