Any expense directly related to operating a business is tax deductible as a business expense. This includes membership fees, day passes, punchcards, as well as conference room rentals at projectY cowork (and other expenses incurred for your business). The IRS defines a deduction based on "ordinary and necessary," which means any expense is deductible if it meets the test of ordinary (reasonable) and necessary.

With that said, those who work from home can also claim a deduction for a home office. Conventional wisdom indicates that a home office deduction is one of the flags for an audit, however.

The advantage of claiming monies paid to a coworking space means it is a cleaner way of claiming "office" expenses. The statements, receipts or invoices from the coworking space provide a clear record of the expense and, because it is separate from any use of a space for personal reasons (like a room at home might be), there's a clean delineation of the business expense. You also avoid the hassle of figuring out the proper amount to deduct (and avoids IRS scrutiny) of a home office deduction. 

So keep tidy tax records this season and make sure you're using your projectY cowork fees to claim your rightful tax deduction!

If you have questions for an accountant, Albuquerque-based CPA Dennis Kennedy has an office in Los Alamos at the Small Business Center (190 Central Park Square) and is here every Monday. You may reach him to schedule a consultation at Kennedydr AT aol.com. 

 

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