Corp Home Office Expenses

[Lee B]

We all know how the TCJA significantly reduced the deduction of Home Office expenses.

Just read an article that a workaround was to use an Accountable Plan to deduct the same expenses.

Just set up an Accountable Plan and reimburse the S Corp or C Corp owner/employee on a monthly or quarterly basis

for all of the same expenses that you would deduct for a Schedule C Home Office including mortgage interest, utilities and depreciation.

I have never run across this idea before. Just wondering what everyone thinks of this approach?

[Medlin Software, Dennis]

There are many ways to account for the desired amount. The obvious are a second phone line, amount of upgraded internet, etc. For the harder to disseminate items, something similar to how home daycare providers calculate seems reasonable.

Works well for me, especially with a relatively small pct of sq ft I use. Easy as well as I am already tracking home costs for another purpose. 

[Lion EA]

Yes, an accountable expense reimbursement plan has always been useful for employee reimbursements, because even before TCJA unreimbursed employee biz expenses on Sch A were not a help to non-itemizers or to those where AGI limited their other credits/deductions and no help for most states. After TCJA, it's about the only way for an employee/owner of an S- or C-corp to be made whole. The corp gets to deduct reimbursements made to employees per their plan; the employees do NOT have added income. Been using accountable plans for my clients since decades ago at HRB.

A snippet from TTB: "Author’s Comment: An S corporation with an accountable plan in place can reimburse shareholder employees for authorized expenses. Under a properly structured plan, the reimbursements will be deductible for the corporation and excluded from the shareholder employee’s income. See Accountable/Nonaccountable Plans, page 8-11, 1040 Edition/Deluxe Edition."