Note that the electricity is a necessary expense and cost of the high-powered equipment used in this home business. This is billed together with my home utilities, but I have power meter tracking to prove which portion is related to the business.
Example: The home office deduction limits the yearly deduction to $1,000 but the home business related electric bills for 2017 totaled over $10,000.
This seems like the wrong approach. At 5 years of this, you'd be carrying over $1k of home office deductions for the next 50+ years.
Is there a separate category of expense where these utility bills should be deducted?
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Some home office expenses are indirectly related, meaning they apply to the entire house and must be prorated. Usually electricity is one of these expenses. If you have proof that the expense is separated and applies strictly to the business, you can take the entire amount as a direct expense.
Some home office expenses are indirectly related, meaning they apply to the entire house and must be prorated. Usually electricity is one of these expenses. If you have proof that the expense is separated and applies strictly to the business, you can take the entire amount as a direct expense.
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