Eight Dollar Blog

Criteria #2: Meet-and-Greet Test.
If you don’t use your home office 50 percent of the time for your homebased business, and don’t meet the exception to the Soloman decision, you can still qualify for the home office deduction. An exception allows you to claim the deduction when you use your home office as a place where you meet and greet your clients (customers, patients, distributors, and so on) as a regular and ongoing part of your business.5 Such use must be substantial and integral to conducting your business.6

During an audit, the IRS will look very closely at your actual physical
meeting with clientele or customers. Telephone contacts do not count, no matter how lengthy or how frequent.7 Meeting and dealing with clients in your home office is what counts. Now-and-then meetings do not qualify.8 The law requires that:

• Meetings occur in a planned way.
• Such meetings are ordinary (or regular).
• Such meetings are an essential part of the way you carry on
your business.

Be sure to keep track of all your hours for these meetings. Every time
you work, you should note in your tax diary what you are doing. When you see clients, you should note this in your diary.

Criteria #3: Home Office Deduction for a Second Business.
You might be able to qualify for a home office deduction in yet another way. If you happen to have a second side business, you can claim a home office deduction for that as well. The deduction does not have to relate to your primary business.

Criteria #4: Display or Inventory Storage.
If you use space in your home to display or store products that you sell on a wholesale or retail basis, you can add the square footage of this space to the space you claim for the home office deduction. One of the requirements, however, is that your residence be the sole fixed location for your business.9 Our recommendation, in order to help you meet this criteria, is to take photographs of the location in your home where you store inventory or display product samples. This is vital. By doing so, the IRS will have proof that you are using the space in this manner and cannot question you.

Taken from : Money Mastery “10 Principles That Will Change
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