Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $6,000. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,800 Interest on home mortgage 5,400 Operating expenses of home 900 Depreciation 1,720 Also, assume that, not counting the sole proprietorship, Rita's AGI is $64,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita’s consulting business generated $16,000 in gross income. a. What is Rita’s home office deduction for the current year?
Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $6,000. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses.
| Real property taxes | $ | 1,800 |
| Interest on home mortgage | 5,400 | |
| Operating expenses of home | 900 | |
| Depreciation | 1,720 |
Also, assume that, not counting the sole proprietorship, Rita's AGI is $64,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home.
Assume Rita’s consulting business generated $16,000 in gross income.
a. What is Rita’s home office deduction for the current year?
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