While you may have a beautiful office somewhere, many of us have had to transform our homes into our offices since the pandemic hit America so hard. If you have been working from home since this crisis hit, you may be able to use some of your PPP funds to cover things like rent, utilities and mortgage interest. It is important to follow guidelines though moving forward. Mark Dicus & Company is here to talk about how you can use your PPP funds to cover the cost of your home office.
How to Know if Your Home Qualifies as a Home Office
When you say that you work from home, it needs to be more than just checking your email a couple of times throughout the day. If you are using a portion of your home for business purposes throughout the day, you may be able to count those expenses as business expenses. Some of the qualifications for this include:
– Having a separate portion of your home that is dedicated to your work. This could be a greenhouse, studio or workshop where you conduct your business activities.
– A designated room that has a desk and space where you exclusively answer calls, emails and conduct business.
– An area in your home that is used to store your store merchandise or inventory.
PPP Loan Forgiveness
It is important to note that not all expenses are eligible under the PPP program. The only expenses that you can legally count include mortgage interest, utilities and rent. There are other expenses that you can deduct from your taxes each year that include repairs, depreciation and renter’s insurance but do not apply to PPP.
Home Office Deduction Worksheet
You can’t simply pay all of your rent or other daily expenses using PPP because you have a home office. When calculating what is eligible, you need to think about what portion of your home is used for an office. If you have a 1,600 sq ft house and you use a room that is 200 sq ft for your business, then you can claim 12.5% of your eligible expenses as home office expenses. Your home office expenses only apply to the expenses that are tied to the business. If you don’t answer phone calls for your business, you won’t be able to use funds to cover your home’s phone bill and so on.
Forgiven PPP Expenses Can’t Be Claimed on Taxes
Unfortunately, if the IRS have forgiven certain expenses under the PPP, you can’t claim those same expenses again on your taxes. Even though this double dipping would be nice, it isn’t legal. It is important for your bookkeeper to keep track of these expenses so that you don’t end up trying to claim them again on taxes.