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Working from home has a lot of perks when it comes to tax savings and cost savings in general, but there are also a few disadvantages that need to be considered before you decide to turn that spare bedroom into a cozy office.   Many people want a home office simply so they can save some money and not have to rent some office space, but working from home will not work for everyone, especially if they are not self-motivated and are easily distracted.

Let’s look at some of the pros and cons of have an office at home.

Pros:

• You save a ton of money on gas with your commute, since it’s merely a few steps from your bed.
• You can wear whatever you want and just hang out in pajamas all day if that’s your thing.
• You can spend more time with your family and stop to play with your kids when you take breaks.
• You can listen to whatever music you want while you are working since there are no other employees to worry about.
• You can use the home office for tax deductions (talk to your CPA for more information).

Some people only look at the pros when considering a home office, but for every benefit of having a home office there is also a negative aspect that comes into play.  Here are some cons to operating a home office.

Cons:

• If you are not self-motivated you will not get much done and will end up wasting a lot of time.
• Distractions are everywhere.  It might be convenient to be able to turn on the TV, raid the fridge, or play with the dog, but all of these things will hurt your productivity to get things done in the office.
• It can be lonely when you are working all by yourself, and this might make you more likely to turn on the TV and get even more distracted.
• Without having a boss telling you what to do,  it can be easy to get lazy and put things off.
• It is all too easy to sleep in and get up late every day, when you really need to be getting up just as early as you would if you have a “real” job.

To see if you really need that home office or not you should closely examine these pros and cons.  You can always try it for a week or so before committing as well, as this will allow you to see what it will be like working at home every day.  It should be noted that having a home office is not for everyone, so you can’t just make blanket statement that home offices are good or bad.  It all depends on who will be using the office and how well they can work in a secluded environment where distractions abound.   Don’t just make the decision based on money, for though it will save you money by not having to drive to work and being able to take tax deductions, if you cannot be as productive in a home office, it will end up costing you even more.

This article by no means is an attempt to give tax advice, but there are a lot of myths about home offices and tax savings that need to be addressed.  First, many do not realize that taking a home office deduction can increase your chances of getting an audit from the IRS. While having a legitimate home office and taking this deduction is certainly within your rights, it might be a huge inconvenience to have to give up an afternoon to a guy in a suit.  Of course, just filing a Schedule C increases your chances of an audit so you may be in the sites of the IRS already.  And if you decide to sell your home after using a home office and taking the tax deduction you may be liable to capital gain taxes as well, so that throws another monkey wrench into the situation.

Besides writing John loves to bake bread and writes for a bread machine recipes website, where he invites other bread machine owners to rate and send in their own recipes for the community to try.