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View Diary: ECSTASY series: Measure the Power! (79 comments)

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  •  now here's the piece for IRS: (4+ / 0-)

    Note, I am not a lawyer or financial consultant, check with your lawyer, tax preparer, or the IRS directly:

    You can get a legitimate tax deduction for home office expenses: square footage rental costs for the space used, and other costs including power consumption.  

    It's important to calculate these things conservatively, which is to say err on the side of a lower deduction than you might think is justified.  

    It's important to document your methods in case there is ever an issue about how you calculated your deductions.

    For power consumption, do this:

    A typical home office consists of a desk with a computer and a telephone.  If the phone is a dedicated landline, that bill is deductible.  If the phone is a VOIP phone provided by your employer, it will have an AC power adaptor.  If you have a dedicated broadband connection for the computer and VOIP phone, that's deductible also, so long as you aren't using the broadband for watching porn (in this instance "porn" is geek slang for any bandwidth-intensive media such as music and video, that are for personal use as opposed to work).  

    Get two power strips; one can be relatively cheap, the other should have a good surge protector.

    Plug the power strip with the surge protector into the wall.  Plug the Kill-a-Watt meter into that one.  This also makes it easier to position the Kill-a-Watt meter where it's easier to read, rather than stuck directly into a wall outlet where you have to get down on hands & knees to see it.  

    Plug the cheap power strip into the front of the Kill-a-Watt meter.   Now plug all your home office "stuff" into that power strip: the computer, the monitor, the printer, the broadband modem, router, the switch or hub, the VOIP phone's AC adaptor, and whatever lighting you use at your desk.

    While you're at work, all of this stuff is "on."  When you're done working for the day, it's "off."  

    Measure your power consumption separately for each of two days.  Let's say it all adds up to 120 watts and runs for 8 hours: that's 960 watt/hours, or 0.960 KWH.  

    Now count up the work days in that month:  for example 20 work days.  Multiply:  0.96 x 20 = 19.2.   That's 19.2 KWH.   You can legitimately deduct 19.2 KWH for that month.  If every month has 20 work days, that's  19.2 x 12 = 230.4 KWH for the year.   If you're only paying 15-cents / KWH, that's a whopping $34.60 of a tax deduction.    You'll have a separate deduction for the rent-equivalent of the square footage for your desk & chair (e.g. a 6' x 6' area, 36 square feet, at your prevailing local rental rate,let's say $1 / square foot, thus $36/month, or $432 / year).  

    For the sake of our own integrity we should never cheat on taxes, but we can certainly take all the legitimate deductions we have.  

    Meanwhile, let's say your residential power bill shows a monthly usage of 180 KWH.  Now you can deduct the 19.2 KWH for your home office, and discover that your consumption-level electricity usage is only 160.8 KWH for that month.

    Again, the point being to reward steps that are taken to reduce overall impact.  That 19.2 KWH you just used to run the computer and phone at a home office, probably saved you a good 20 gallons of gasoline that you might have spent driving to an office.  Is that cool or what?  

    --

    One more thing:  when you file your taxes, you might be encouraged by your tax preparer to submit a doc that shows how you arrived at e.g. 230 KWH for the year.  

    In that case, what you say is:  you connected all of your home office electrical devices to a power strip connected to a Kill-a-Watt meter, and took a separate reading on each of two days, and then took the average of those readings and multiplied that by the number of work days in the year.  This plus copies of a typical month's electric bill, should be sufficient.   And best of all it might start a contagious meme at your local IRS office!  

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