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4 Tips For Notaries Claiming Home Office Tax Deductions

Income tax tips for Notaries

Updated 2-14-19 for 2018 tax year. April is fast approaching and Notaries want to get the most out of their 2018 tax returns. The Notary Bulletin asked Jackie Perlman, principal tax research analyst at The Tax Institute at H&R Block, for tips for those claiming a home office deduction for the 2018 tax year.

This is general information only, and every person’s tax situation can differ when it comes to general Notary tax tips and mileage deductions. If you have specific questions about your tax situation, contact the IRS or your tax advisor.

What are the most important steps Notaries should follow when claiming a home office deduction?

In order to claim the deduction, your home office must be used regularly and exclusively for business purposes. You must designate either a separate room in the house or an area of a room that will be devoted solely to your trade or business.

There are some exceptions to the “exclusive” test for an area used to store inventory, for instance, and also for areas used for day care businesses.

A simplified “safe harbor” option allows you to deduct $5 per square foot to a maximum of 300 square feet (maximum deduction $1,500) without extensive recordkeeping. Extensive recordkeeping is not required for the safe harbor option, but the maximum $1,500 deduction is designated for a larger room (about 20' x 15'). If your home office is smaller, the deduction is smaller too.

What records should Notaries keep related to home office deductions?

The home office deduction allows you to claim as business expenses a portion of both deductible expenses, such as mortgage interest and real estate taxes, and otherwise nondeductible personal expenses including utilities, home insurance, repairs and depreciation. However, you must keep all statements and receipts to substantiate these claims.

Mortgage and real estate statements should be kept as deductible expenses, too.

Where is the home office deduction claimed?

Self-employed taxpayers report the expense on Schedule C, line 30. Taxpayers using the safe harbor method metnioned above can use a worksheet in the Schedule C instructions to calculate the deduction. Those not using the safe harbor must also complete Form 8829, Expenses for Business Use of Your Home, to calculate the deduction.  

How will the tax reform law affect the home office deduction starting in 2018?

For employees: Under the Tax Cuts and Jobs Act (TCJA), miscellaneous itemized deductions subject to the 2 percent limitation are no longer allowed. Since the home office deduction is this type of expense, employees will not be able to claim it starting in 2018 (the tax return filed in 2019).

Note that if employees continue to itemize, they can still claim mortgage interest and real estate taxes as itemized deductions (but see the changes explained in the self-employed section). Because of the large increase in the standard deduction ($12,000 for single filers, $24,000 for married couples filing jointly), combined with the loss of some itemized deductions, many employees may find it not worthwhile to itemize deductions.

For self-employed taxpayers: While the TCJA doesn’t change anything about the home office deduction itself, some changes to itemized deductions may indirectly affect the home office deduction.

  • The itemized deduction for home mortgage interest on a mortgage taken out after December 15, 2017, is limited to interest paid on up to $750,000 of acquisition debt.
  • The itemized deduction for all state and local taxes, which includes real property taxes, is limited to $10,000.

The home office deduction, however, is not subject to these two new limitations. The new Form 8829 instructions explain how to allocate the excess mortgage interest and real estate taxes to the home office deduction. These changes apply to tax years 2018 through 2025.

David Thun is an Associate Editor at the National Notary Association.

Additional Resources:

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Add your comment

Judy Taylor

28 Feb 2016

What about miles driven? If I have a permanent notary sign in my car window with my phone number, am I allowed to claim all the mileage in my state as advertising?

National Notary Association

29 Feb 2016

Hello. For more information about claiming mileage deductions, please see our article "A Notary's Guide For Claiming Mileage Deductions At Tax Time":

Chuck Alexander

12 Mar 2018

Thank You for lnformtion on Notary tax credit.

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