As a professor, can I deduct home office costs?

Q: I am a professor who works from home on my research three days a week. Can I take any deductions for use of my home computer, paper, and printing? —Michael, Beverly

The following answer was provided by Mark Misselbeck, CPA, Levine Katz Nannis & Solomon PC, Needham.

A: The answer depends on several pieces of information not encompassed in the question.

If your only source of income is as a university professor, then the use of the office would have to be for the convenience of your employer AND it would have to be the case that you are not provided office space by your employer.

If you are conducting research to publish a book that you would receive royalties from or to pursue an invention that you would patent and then market for royalties, you could make the case that such authorship or research activities are a business unto themselves. The "hitch" is that deductions for an office in the home for such a business are only deductible to the extent that they will reduce your income from the business to zero (excess deductions carry over, indefinitely, and may be used at a time when the income from the business exceeds all other expenses of the business for that year).

The downside is that the depreciation claimed on the residence may not be excluded from income on the sale of the residence under the $ 250,000/$ 500.000 principal residence exclusion AND will be taxed at a maximum rate of 25% (somewhat higher than the current 15% [or 5%] capital gains rates.

If you do qualify as an employee, you may only claim the deduction if you itemize your deductions and they will be subject to reduction by 2% of your adjusted gross income (they will not be deductible, at all, in computing the Alternative Minimum Tax).

To claim an office in the home expense, you will need to prepare and file with your return a Form 8829.