Question

Taxpayers with an office in their home may deduct a percentage of their home-related expenses. This percentage is based on the ratio of the office's area to the area of the home. A taxpayer with a 2300 square-foot home maintains a 10' x 12' office. The yearly electricity bill for the home comes to $4900. How much of this is deductible?

Answer 1

To find the deductible amount of the yearly electricity bill, calculate the percentage of the home used as an office and apply that to the total bill; the deductible amount for a 10'x12' office in a 2300 square-foot home from a $4900 bill is $255.78.

Step-by-step explanation:

Firstly, to determine the deductible amount of the electricity bill for a home office, we calculate the percentage of the home used as an office. The office space is 10 feet by 12 feet, resulting in 120 square feet. Given the total home area is 2300 square feet, the office occupies approximately 5.22% of the home (120 sq ft / 2300 sq ft * 100 = 5.22%).

Next, we apply this percentage to the yearly electricity bill to find the deductible amount. The yearly electricity bill is $4900, so the deductible amount is 5.22% of that figure:

0.0522 * $4900 = $255.78

Therefore, $255.78 of the $4900 yearly electricity bill is deductible for the taxpayer with the home office.