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Are two home offices better than one?

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in Small Business Tax

Q. I've operated a home-based business for years. My wife recently semi-retired, and she also wants to establish a consulting business at home. Can we both claim home-office deductions? C.C., Naperville, Ill.

A. Yes, so long as you separately meet the tax-law requirements. Essentially, each spouse’s office must be the principal place of business or a place to regularly meet clients, customers or patients in the normal course of business. Remember that the home office must be used exclusively for business to qualify for deductions.

Tip: Although it hasn’t been proved that doubling up on home-office deductions increases audit risk, this could give your tax return higher visibility. Make sure that your position is airtight.

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