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I have an LLC with multiple partners (members) that work from home. We're a tech startup company. We each work from home, and want to take advantage of the home office tax deduction. Is this possible?

The LLC is incorporated at one of the member's homes, not a PO box.

The LLC is setup as a pass-through for tax purposes.

How is this done? Do we each claim that amount on our personal Tax Returns? Or collectivity as an LLC first?

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I'm not an accountant - but I think there are two ways to handle this

  1. LLC pays members a stipend/reimbursement (or whatever you want to call it) that covers their home office costs. The LLC then charges that as an expense.

  2. Each member claims the deduction on their own taxes - the LLC has nothing to do with it.

I would guess that #2 is more of a "flag" and harder to fight for with the IRS.

If there aren't accurate receipts or direct costs for #1 then the person might have to claim a portion of that as income rather than expense reimbursement.

Again - not an accountant - you should get some advice from one

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Hi Tim, thanks for the response. I definitely will be reaching for an accounting in the end. Your information helps me structure my thoughts before I approach one. Gives me some direction and basis to reduce my total accounting cost. =) Thanks again. – BoxCat Feb 1 '12 at 22:44

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