Aaron James has a qualifying home office. The office is 500 square feet and the entire house is 2,500 square feet. Use the following information to determine his allowable home office deduction: $$\begin{array} { | l | r | }
\hline \begin{array} { l }
\text { Net income from self-employment before } \
\text { home office deduction }
\end{array} & \$ 150,000 \
\hline \text { Expenses from home } ( 100 \% ) &\
\hline \text { Home mortgage interest } & 12,000 \
\hline \text { Property taxes } & 4,000 \
\hline \text { Homeowner's insurance } & 2,500 \
\hline \text { Utilities } & 2,200\
\hline \text { Depreciation on office portion of home } & 1,100 \
\hline
\end{array}$$

Question

Aaron James has a qualifying home office. The office is 500 square feet and the entire house is 2,500 square feet. Use the following information to determine his allowable home office deduction: $$\begin{array} { | l | r | } 
\hline \begin{array} { l } 
\text { Net income from self-employment before } \
\text { home office deduction }
\end{array} & \$ 150,000 \
\hline \text { Expenses from home } ( 100 \% ) &\
\hline \text { Home mortgage interest } &  12,000  \
\hline \text { Property taxes } & 4,000 \
\hline \text { Homeowner's insurance } & 2,500 \
\hline \text { Utilities } &  2,200\
\hline \text { Depreciation on office portion of home } & 1,100 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The allowable home office deduction is calculated as follows:Home office deduction = (Area of home office / Total area of home) x Total home expensesHome office deduction = (500 / 2,500) x (12,000 + 4,000 + 2,500 + 2,200 + 1,100)Home office deduction = 0.2 x 21,800Home office deduction = $4,360

Aaron James Has a Qualifying Home Office A) $5,240 B) $4,140 C) $4,260 D) $21,800

Aaron James Has a Qualifying Home Office A) $5,240
B) $4,140
C) $4,260
D) $21,800