Yes, if you use the actual expenses method. For a home office, you can choose between the actual expense method and the simplified method. The simplified method for taking this deduction takes $5/square feet, but is maxed at $1,500 and accounts for all costs of the home office without having to track individual expenses. If you choose this method, you won't be able to deduct your system. You must use the actual expenses method to qualify.
When you enter the home office with the actual expenses method, the software will ask about expenses related to the entire home (indirect) and expenses related to the home office only (direct). The indirect expenses are allocated based on the square foot percentage of home office to entire home, while direct expenses are completely deductible. If your security system applies to the entire home, you can enter it as an indirect expense. The steps below will cover how to enter both indirect and direct expenses:
- Log in and click Take me to my return
- Click Federal Taxes and then Income & Expenses (If you have the blue button 'Check for more income', click it and then click 'Skip to see all income')
- Next scroll down to Self-Employment and click Show more
- Click Start/Revisit next Income & Expenses
- Next, click Edit next the applicable Self-employed business the home office is for (most people have one). If you haven't setup your business yet, this is where you'll do so.
- You'll come to a summary screen for Your XYZ work. Click Add expenses for this work and on the next screen you'll see a listing of the common business expenses.
- Next, under Common Expenses, check the circle for the Home Office and click Continue. First, you'll be asked about the qualifying criteria for the home office deduction. Then, you'll need to select the Actual Expenses method. Note: your software will need to shift gears a bit because of depreciation and you'll be asked the qualifying questions again.
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Then, you'll be asked about allocating your indirect expenses for the entire home; it's recommended to let the software allocate these (making the first selection). After making this selection, you'll be asked Do I have expenses that apply only to the home office?, you'll need to select Yes, I have expenses that apply only to the home office (this is not common) if you have direct expenses.
- Next, you'll first be asked about indirect expenses and then your direct expenses, which is where you can enter your system.
At step #2, if you do not have a Federal Taxes tab then click the Business tab and then:
- Click Continue and then select I'll choose what I work on
- Click Start/Revisit next to Business Income & Expenses
- Then click Edit next to the applicable Self-employed Business
- Scroll down to the Business Expenses section and click Start/Update next to Home Office Deduction (pick up above instructions for more details)
