By Nationally-Known Tax-Deduction Expert Dr. Ron Mueller

#3 EXCLUSIVE for The Network Marketing Magazine Dec. 2018 Issue

IRS Form 8829: “Deductions for Business Use of Your Home” is one of the most under-utilized and misunderstood of the special tax deductions available to network marketing professionals and other home-based business owners.

NOT using this deduction may be COSTING you THOUSANDS in overpaid taxes!

Let’s do some “myth-busting…”

MYTH #1:  I need to have a spare room available, in order to get this deduction.

TRUTH:     No you don’t.  It’s so much easier than that.  (Keep reading – I’ll explain.)

MYTH #2: It’s risky because most people lose this deduction if they’re audited.

TRUTH:    In my experience, most people win this deduction easily – assuming they
“know the rules,” which I will teach you in this article.

MYTH #3: Figuring out the amount of this deduction is complicated.

TRUTH:   The IRS gives you four different options for calculating it, and – get this – one of them is a “safe-harbor method,” which means, “If you do it this way, we will accept your numbers without question.”

At this point you are either saying to yourself (a) I need to open my mind about this, or (b) I never did believe those myths.  Either way, let’s move on, shall we?

What does it take for an area (or areas) of your home to QUALIFY for this deduction?

  • The area(s) used for business, must be used EXCLUSIVELY for business. Not “most of the time,”
    but ALL of the time. Not used for any non-business activities – not even occasionally.

  • It must be used REGULARLY for business activity. If you have a spare room, you can’t just put a desk in it and call it a home-office for tax deduction purposes. You must USE it and use it regularly and consistently.

  • Your home-office does not need to be your only office. Perhaps the easiest way to qualify an area for tax deduction purposes, would be to perform the “primary administrative functions” of your business in that area. Your business may be running a flower shop, but if you bring your admin work home to do, you will qualify.

  • The designated area MAY be a separate room, but it does not have to be. It just needs to be a “visually identifiable space.” A desk set up in a corner of a large room, and used only for business purposes, can qualify that square footage as a business-use area.

How Do You Determine the Dollar-Value of Your Deduction?

Here’s a short-cut answer – the IRS offers a “Safe Harbor Rule,” which means if you use this method, the IRS will not challenge your deduction amount. To use this method, first determine the total square footage of all areas you declare to be “regular and exclusive-use” business areas.  Next, multiply that number by $5.00, and the result is the amount of your tax deduction for business use of your home; HOWEVER, the number is capped at $1,500 total (which works out to be 300 sq. ft.)

A $1,500 deduction would most likely reduce your taxes (or increase your tax refund) by about $500.

The “Safe Harbor Rule” is quick and easy, but most people would get a far greater deduction by using one of the three IRS-approved methods of computing your “Business-Use Percentage” (BUP) – i.e., the total percentage of your home that qualifies as “regular and exclusive-use” business areas. (All three methods are described, step-by-step, in Chapter 4 of my latest book, “WINDFALL Tax-Savings APPROVED for Small-Business Owners.”)


Once you have determined what PERCENTAGE of your entire home is being used “regularly and exclusively for business purposes,” that percentage of all overhead expenses associated with your home, overall, would become deductible as Business Expenses.

Let’s look at an EXAMPLE based on a hypothetical assumption that your BUP is 23% (just a random number for illustration purposes).  The question is: How does “23%” lead you a tax deduction dollar-amount?  So, 23% of all “overhead expenses” could be converted into tax-deductible business expenses.  But what the heck are the “overhead expenses” that become deductible?  (The answer may amaze you!)


23% of your RENT or Mortgage                                 23% of your home REPAIRS

23% of ALL UTILITIES                                             23% of your home MAINTENANCE

23% of homeowners/renters INSURANCE                  23% of your SECURITY ALARM system

23% of your PROPERTY TAXES                               23% of your PEST removal/prevention

23% of your neighborhood ASSOCIATION DUES       23% of your HOUSECLEANING services

23% of your TRASH COLLECTION fees                     23% of your APPLIANCE REPLACEMENT


Let’s compare.

Would you choose DOOR #1: Safe Harbor, but capped at $1,500?

Would you choose DOOR #2: A percentage of ALL the above “overhead expenses” that you are already paying for anyway (but paying in after-tax dollars) – with no cap on the amount?

Here’s the bottom line.  If you or your spouse can qualify for a deduction for business use of your home, and you choose to not claim it, you have chosen to be overtaxed.

Any you won’t even get a thank-you note from Uncle Sam.


The author, Dr. Ronald R. Mueller, is the dean of the Home Business Tax-Savings Learning Center, located at , and the author of “WINDFALL Tax-Savings APPROVED for Small-Business Owners” and the “2018 Tax Cuts & Jobs Act EXECUTIVE SUMMARY.”  Both books are available from  For nearly 20 years he has been teaching network marketers about home-business tax deductions and how to qualify for them. Subscribe to his email alerts for free at

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