16 AUGUST 2024 WorldWide Drilling Resource® Drilling Into Money Not Boring by Mark E. Battersby Subsidizing Expenses with a Home Office Running a drilling business from home or simply bringing work home can create a tax deduction for home office expenses. Even storing business records or supplies at home can mean a deduction. The time to lock in and maximize the write-off is now, not when the drilling operation’s tax returns are being prepared. Although deductions for home office expenses aren’t available as a personal deduction or by an operation’s remote employees, self-employed and small business owners can write off many of the expenses of maintaining a home office. To claim the expenses of maintaining an office in the home, the space must be used exclusively for business-related purposes. The space doesn’t have to be walled off, but must be an identifiable space - not intermixed with nonbusiness use. The Internal Revenue Services’s “exclusive use” test doesn’t apply when space in the home is utilized for storage. Of course, the space must be immediately identifiable as suitable for storage and the home must be the only fixed location used by the drilling operation. Depreciation is the basis of the home office deduction for homeowners. The tax basis is then multiplied by the percentage of space used for the home office or storage to determine the amount that can be depreciated. Using a separate, freestanding structure, such as a studio, barn, shop, or garage, as a home office or for storage doesn’t mean it must be the principal place of business to reap the deduction - so long as the structure is used only for the drilling operation. Claiming the deduction for the expenses of maintaining a home office does not significantly increase the chance of being audited, but keeping good records and receipts of home office expense is important whether using the regular method or the simplified method. Since 2013, a simplified option can be used to compute the deduction for business use of the home. With the simplified option, a standard deduction of $5 per square foot of the home used for business, up to a maximum of 300 square feet, is allowed. In exchange for this greatly simplified deduction and less recordkeeping, a lower deductible amount is usually the result. Navigating the restrictions of the home office tax deduction to reap the biggest - and safest - tax write-off requires early, not last-minute, planning. Professional guidance now, not merely at tax time, is advisable. Mark Mark E. Battersby may be contacted via e-mail to michele@worldwidedrillingresource.com The National Drilling Association presents DRILLEXPO 2024 September 25, 2024 9:00 AM - 3:30 PM 18 holes at StoneWater Golf Club - limited spots remain! 10:00 AM - 2:00 PM Brewery and Ice Cream Tour 4:30 PM - 6:30 PM Show Opening and Meet with Vendors 6:30 PM - 10:30 PM Rooftop Social September 26, 2024 7:30 AM - 4:30 PM Trade Show and Convention 5:00 PM - 8:00 PM Presidents Dinner For more Information, E-mail: info@nda4u.com nda4u.net September 25-26 Huntington Convention Center Cleveland, Ohio
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