Deducting utilities on your Schedule C is relatively straightforward. Utilities are expenses associated with providing public services to your business location. Where these expenses get deducted depends on the location of the utilities. Are they in your home where you have a home office or at a separate site used for business?
Separate Business Location:
Utilities for a business located outside of the home office are deducted on Schedule C. Utilities commonly include:
These items get deducted as utilities, even if you also have a qualified home office.
For example, Sarah primarily works from her home office. She also shares the rent and utility costs of a conference room with several other agents. This arrangement allows her to meet with clients in a business setting when advantageous. The amount she pays for her share of the utilities gets deducted as utilities on Schedule C.
Home Office Utilities:
Most Real Estate Agents operate out of their homes. Do not report utilities for a home office on Schedule C. Home office utilities get deducted on Form 8829 when claiming actual home office expenses. Use Form 8829 even when the office is a separate structure on the same lot as the agent’s residence. For more information on deducting utilities on Form 8829, please read our article on Deducting Actual Home Office Costs.
When an agent has a qualified home office, there are a few costs that and not deducted as utilities on schedule C or Form 8829. Here’s a brief list:
Summary and Invite: We hope this article helps you understand utilities deducted by Real Estate Agents who are sole proprietors. If you’d like some assistance cutting a Real Estate Agent’s highest cost - taxes, we invite you to download our Real Estate Agent Tax Organizer.
For those extra-serious about minimizing taxes, check out our Real Estate Agent Tax-Cut Library. It contains over eight hours of tax-cutting information broken into twenty-nine searchable volumes. It’s tax-deductible, covers every possible deduction a Real Estate Agent can take, and pays for itself saved taxes. If you want to share the tax-cut with your whole agency, check out our Broker Version.
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