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Random IRS Question - CA MT

Posted: Feb 05, 2011

I've been shopping accountants and have been told 2 different things regarding being an IC and filing with deductions.

One told me that in CA a party cannot reside in an apartment and file as/deduct business expenses.

Another one never mentioned this and gave me an estimate for preparation based on filing as an IC and a business return.

Does anyone know which of these 2 are correct? I'm rather confused as how both can be licensed and yet give totally separate guidelines about IC filing.

Thanks for any clarity you can lend!

Apartment Comment Bogus - mtan

[ In Reply To ..]
Many believe unless you have a "separate entrance" for clients to "visit" your home-based business that you're not really in business. The Internet gives pause to that claim. Have used apartment office for years as MT/small MTSO for over 10 years. No complaints from IRS. You just calculate the space you use with percentage of total square footage according to the IRS schedule for home office deduction. Other than that, would find an accountant that specializes in small business/home office clients. Actually, that's scary that you were told that. Keep looking!

TO MTAN - QUESTION - CA MT

[ In Reply To ..]
Thanks so much for your post...Are you in CA?

What you describe is precisely what we were told last year by the person who figured our taxes and has moved away (which is why we're trying to find a new accountant this year).

CA MT - Wanda

[ In Reply To ..]
I have the best CPA in the Bay Area and he has consistently advised me to take the office in home deduction--and I do live in an apartment. We have never been questioned or audited.

Ditto; 2 CPAs in a row have done the - home office deduction for me

[ In Reply To ..]
and I've lived in an apartment the whole time. When I asked the first CPA if it isn't an IRS red flag, he said no, not in this day and age, because of the huge numbers of people who now telecommute. But 20 years ago? Sure-fire audit flag.

Ask your close friends and relatives who they like as an accountant. Ask your attorney and your broker, even. Mine was recommended to me both by my broker and by my mother's church friends.

Not necessarily a red flag - Old Pro

[ In Reply To ..]
I worked out of an apartment before it was "fashionable" in the business world, in the sixties! And I only got audited once. I had kept careful records and honest books and I went to the audit and won, no problem.

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