Alex Briem works exclusively from home as an employed salesperson for SET Co., and during the year Alex earned $21,000 from SET Co.Alex's office occupies 8% of the home's square footage.The following costs were incurred for the entire home during the year: property taxes $3,000, insurance $1,500, utilities $2,400, and mortgage interest $6,000.How much can Alex deduct for the year?
A)$0
B)$192
C)$552
D)$1,032

Question

Quizplus · Accepted Answer

Alex can deduct the portion of the home expenses that are related to the office space. To calculate the office expense, we first need to determine the square footage of the office. If the total square footage of the home is 1000 sq. ft., then the office is 8% of that, or 80 sq. ft. To calculate the office expense, we multiply the total home expenses by the percentage of the home used for the office:

Property taxes: $3,000 x 8% = $240
Insurance: $1,500 x 8% = $120
Utilities: $2,400 x 8% = $192
Mortgage interest: $6,000 x 8% = $480

Total office expenses = $1,032
Since Alex earned $21,000 from SET Co., the $1,032 in office expenses is fully deductible as an employee business expense on Schedule A of Form 1040. Therefore, the correct answer is (C) $552.

Alex Briem Works Exclusively from Home as an Employed Salesperson