So, first I'd like to say the LLC has been setup, and no we have not "finished" all aspects of the business. Meaning, it's legal but we're ironing out a lot of loose ends, and will be consulting a tax attorney when the time comes... so that's my disclaimer, I'm just here for general thought.

Background- when my girlfriend moved in with me, I was renting and the lease and utilities were in my name. We bought a house, (her loan, she's the only one on title) and when we moved in I just transferred my utilities to the new house. By definition she qualifies as a domestic partner, and we share everything... bank accounts, income bills etc. So, on paper she owns the house, utilities are mine.

My actual question... she has started a single entity LLC. As we understand it, she can deduct our home office (based on the simple form 300 square feet max x $5) for $1500 annually. Since I own the utility, can she and I sign a contract between myself and her LLC to lease utilities for the office at a contract flat rate. Example, $450 per month, payable on the first of each month, flat.

My goal was to give her another deduction, but would that muddy the water for my be having to claim the $450 a month as income. More importantly, would her deduction benefit outweigh my "extra income" in this situation.

I typically overpay my taxes slightly each pay period to guarantee a "53rd paycheck." So I don't think I'd owe anything, but I do not want to over complicate the situation... is this something that's legal and beneficial?

Thanks in advance for all opinions. I will seek legal advice before actually doing it... it just happened to be on my mind today when I found this board.

  • 1
    There are very specific rules around the home office deduction, detailed in IRS Pub 587, and utilities are a part of that. – Ben Miller - Remember Monica Jan 20 '17 at 6:27
  • To clarify: the house loan is under her name and only she pays the house loan? And only you pay the utilities? You don't pay the mortgage at all? – CQM Jan 21 '17 at 6:48

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