Take Advantage of a Home Office Reimbursement

If you have a home office and are looking for ways to maximize your tax savings maybe it’s time to look into the home office reimbursement.  This reimbursement method allows a corporation to reimburse an employee for incurred business expenses, which includes those stemming from your home office.

With a little up front implementation and some routine record keeping, expenses that would otherwise provide no tax benefit can be turned into another tax saving strategy.

Initial requirements to provide a home office reimbursement through the corporation:

  • Adopt an accountable plan within the corporation to outline the requirements for expense reimbursement policies.
  • Provide a letter of convenience to the officer stating  that having a home office is a condition of employment.

After an accountable plan is in place, you are ready to receive the benefits, here’s how:

  • As an employee of the corporation you submit expense reports to the corporation for expenses incurred from your home office.
  • The corporation reimburses you for those expenses and claims the total amount as a deduction on its corporate tax return.
  • You receive the reimbursed employee business expenses, and as reimbursements they are not taxable as income to you.

There are some ongoing maintenance requirements, such as timely request for reimbursements and record retention.  However, done appropriately the home office reimbursement is the best way to turn otherwise non-deductible personal expenses into deductible business expenses.

Please contact us with any questions or if you would like help setting up the accountable plan.

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