If You Want to Claim the Home Office Deduction but are Paranoid About an Audit, Then Request a Reimbursement from Your Corporation

The standard way to report the home office deduction is by filing IRS Form 8829 with your 1040 tax return.  Some think this will be a “red flag” for an audit.  We don’t believe that nor do several accountants we know who represent large numbers of dentists.  But, if you are concerned and if you practice through a separate practice entity (corporation or partnership), then submit your personally paid homeowners’ expenses to the entity for reimbursement.  You can use Form 8829 as a guide.  Complete the form and submit it to the corporation.  Since you already paid these expenses personally, the reimbursement will be tax-free to you.  The corporation will take the deduction and put it under a category that will not draw much attention — like “office expense.”

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