Question:
A self-employed missionary receives a Form 1099-MISC reporting his support income and files Schedule C to claim his earnings and business expenses. The expenses that he can deduct on Schedule C include a long list of typical costs such as business mileage, office supplies, conference fees, and travel and entertainment. He spent $14,000 of his support to build a room attached to his house. The room is used exclusively as a church and ministry center. Is there any provision for him to reduce his income and self-employment tax by reporting a business expense deduction related to business use of his home?
Answer:
By spending his support to add to his personal residence (a home he owns and not one owned by the church), he will presumably be the ultimate beneficiary of the income since the sale of his home will likely bring greater value than without the addition. Hence, I see no provision to immediately write-off the expense in the year of expenditure. However, since it is an exclusive business use of his home it will likely qualify for a Form 8829 deduction. A percentage of his total home expenses will be deductible as a reduction of taxable income both for income and for self-employment tax purposes.
A self-employed missionary receives a Form 1099-MISC reporting his support income and files Schedule C to claim his earnings and business expenses. The expenses that he can deduct on Schedule C include a long list of typical costs such as business mileage, office supplies, conference fees, and travel and entertainment. He spent $14,000 of his support to build a room attached to his house. The room is used exclusively as a church and ministry center. Is there any provision for him to reduce his income and self-employment tax by reporting a business expense deduction related to business use of his home?
Answer:
By spending his support to add to his personal residence (a home he owns and not one owned by the church), he will presumably be the ultimate beneficiary of the income since the sale of his home will likely bring greater value than without the addition. Hence, I see no provision to immediately write-off the expense in the year of expenditure. However, since it is an exclusive business use of his home it will likely qualify for a Form 8829 deduction. A percentage of his total home expenses will be deductible as a reduction of taxable income both for income and for self-employment tax purposes.
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