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-foot by ​18-foot office. If the yearly electricity bills for the home come to ​$4800​, how much of this is​ deductible?

Answer 1

To calculate the deductible portion of the electricity bills for the home office, we need to find the ratio of the office's area to the area of the entire home and then apply that ratio to the total electricity bills.

Step 1: Calculate the area of the office:

Area of the office = Length × Width

Area of the office = 10 feet × 18 feet = 180 square feet

Step 2: Calculate the ratio of the office's area to the area of the entire home:

Ratio = Area of the office / Area of the home

Ratio = 180 square feet / 2300 square feet

Step 3: Calculate the deductible portion of the electricity bills:

Deductible amount = Ratio × Total electricity bills

Deductible amount = (180 square feet / 2300 square feet) × $4800

Now, let's calculate:

Deductible amount ≈ (0.07826) × $4800

Deductible amount ≈ $375.02

So, the deductible portion of the electricity bills for the home office is approximately $375.02.