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When to deduct the business next door

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in Small Business Tax,Small Business Tax Deduction Strategies

Q: I thought I read in your publication recently that I would be entitled to certain tax deductions not normally allowed if I was a corporate officer living next door to my business. Is this correct? P.B.W., Grantville, Pa.

A: The IRS offers no such neighborly tax break. But maybe you were thinking about the home-office deduction rule that allows deductions for taxpayers who maintain a separate structure adjacent to the home, such as a detached garage that was turned into an office or a shed that stores product samples. You can earn that deduction even if the separate structure is not your principal place of business or a place where you meet customers. (See 3/8/04 issue.) Note: For more details on this write-off, read the instructions to IRS Form 8829, Expenses for Business Use of Your Home, at www.irs.gov/pub/irs-pdf/i8829.pdf.

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