Question

The following individuals maintained offices in their home:

(1) Dr. Austin is a self-employed surgeon who performs surgery at four hospitals. He uses his home for administrative duties as he does not have an office in any of the hospitals.
(2) June, who is a self-employed plumber, earns her living in her customer's homes. She maintains an office at home where she bills clients and does other paperwork related to her plumbing business.
(3) Cassie, who is an employee of Montgomery Electrical, is provided an office at the work but does significant administrative work at home. Her employer does not require her to do extra work but she feels it is necessary in order to properly do her job.

Who is entitled to a home office deduction?

A) Dr. Austin and June
B) Dr. Austin
C) Cassie and June
D) All of the taxpayers are entitled to a deduction

Answer 1

Dr. Austin and June are entitled to a home office deduction as they both use part of their homes exclusively for business purposes and are self-employed. Cassie does not qualify because she is an employee and her employer provides an office.

Step-by-step explanation:

The question is about who is entitled to a home office deduction. According to the IRS, to qualify for a home office deduction, a taxpayer must exclusively and regularly use part of their home for business purposes. Additionally, for a self-employed individual, the home office must be their principal place of business.

1. Dr. Austin qualifies since he is self-employed and uses his home exclusively for administrative purposes as he has no other office.
2. June, a self-employed plumber, also uses her home office exclusively for her business, making her eligible for the deduction.
3. Cassie, on the other hand, is an employee and not self-employed. Her employer provides an office, and the work done at home is not required by her employer, making her ineligible for the deduction under the strict criteria.

Therefore, the correct option for who is entitled to a home office deduction is A) Dr. Austin and June.