LLC - An Accountant says it's not worth it to claim a deduction for a home office?

[davidlieb]

I have two rooms in my house that I exclusively use for my LLC, taxed as an S-Corp.
From what I've read, it looks like I would qualify for a home office deduction.

An accountant I spoke to says not to bother because I'd have to claim the deduction from the business as rental income on my personal taxes, and so it's all a wash. Is this correct? Any advice or links to show him is appreciated.

[Critter-3]

The accountant is correct ... you should be an employee of the corp getting issued a W-2 so you cannot deduct OIH expenses as an employee.  And since the corp doesn't own your home you would have to lease the space to the corp ... that way the corp would get the deduction but you would have to report the income on the Sch E and take depreciation that will have to eventually be recaptured.  So all this trouble for a net zero result is not worth the effort and it opens you up to an IRS audit.

[Mike9241 · Accepted solution]

see this article - backdating documents is not allowed

your accountant is correct if you don't have an accountable plan.

https://proconnect.intuit.com/articles/home-office-deductions-expenses/ 

summary of article

2) The S corporation can pay you rent for the home office.
3) The S corporation can pay you for the costs of a home office under an "accountable" plan for employee business expense reimbursement.

The third option, being reimbursed under an accountable plan, provides the greatest tax savings. It is an excellent way to get money out of your closely-held corporation tax-free. The corporation can deduct the amount of the reimbursement and you do not have to report the payment on your personal income taxes.

The third option is better than having the corporation pay you rent for the home office. While your corporation can deduct the rent paid to you, you must report the rent as income on Schedule E.