Tax

Many business owners assume they cannot claim a home-office deduction because their home is too small. In fact, the tax law says otherwise.

A home office does not have to be an entire room. If you use a clearly defined area of your home exclusively for business, you may qualify for the deduction—even if that space is only a few square feet.

The biggest benefit often isn’t the deduction for home expenses. Instead, a qualifying home office can make your home your principal place of business. That can convert trips between your home office and other work locations from non-deductible commuting into deductible business mileage.

To qualify, you must use the space exclusively and regularly for administrative or management activities such as bookkeeping, billing customers, scheduling appointments, ordering supplies, or preparing reports. You also cannot have another fixed location where you perform substantial administrative work.

This strategy remains available in 2026 for self-employed individuals, partners, and S corporation owners whose corporations properly reimburse business expenses. Unfortunately, W-2 employees generally cannot claim a home-office deduction under current law.

If you operate a business from your home—even occasionally—it may be worthwhile to review whether you qualify for this valuable deduction. A small amount of dedicated space could produce meaningful tax savings.

If you want to discuss the home-office deduction, please call me directly at 408-778-9651

• By Leon Clinton
• July 14, 2026

If you own more than 2 percent of an S corporation, the good news is that the rules for deducting your health insurance remain unchanged for 2026. By following a few important steps, you can continue to deduct the cost of coverage for yourself, your spouse, your dependents, and your children under age 27.

To qualify, your S corporation must either pay your health insurance premiums directly or reimburse you for them. The corporation must then include the premium amount as taxable wages in box 1 of your Form W-2, but not in boxes 3 or 5. You can then claim the self-employed health insurance deduction on your individual tax return if you meet the eligibility requirements.

One of the most common mistakes involves compensation. Your deduction cannot exceed your box 5 Medicare wages. If you take little or no salary, you may lose part or all of the deduction, even though the premiums appear on your W-2.

Another trap affects family members who work in the business. Under the tax law’s family attribution rules, certain relatives may be treated as shareholders even if they own no stock directly. This can change how their health insurance must be reported and deducted.

Finally, be careful if you reimburse non-owner employees for individually purchased health insurance. Doing so outside an approved arrangement can trigger substantial IRS penalties.

If you want to discuss S corporation health insurance, please call me directly at 408-778-9651

• By Leon Clinton
• July 12, 2026

Beginning in 2026, the Section 199A qualified business income deduction becomes a permanent part of tax planning for pass-through business owners.

This deduction can allow owners of sole proprietorships, partnerships, S corporations, and certain other pass-through businesses to deduct up to 20 percent of their qualified business income. C corporations do not qualify.

The 2026 rules bring several favorable changes. First, the deduction no longer expires after 2025. Second, the income phase-in ranges increase, which may allow more taxpayers to receive at least a partial deduction. For 2026, the threshold is $201,775 for single filers and heads of household, and $403,500 for married couples filing jointly.

If your taxable income is at or below these amounts, the deduction is generally straightforward, and most types of pass-through businesses can qualify.

If your taxable income exceeds the threshold, planning becomes more important. W-2 wages, qualified business property, retirement plan contributions, and business structure may affect the amount of your deduction. Certain service businesses, such as law, health, accounting, consulting, and financial services, may face additional limits at higher income levels.

The new rules also create a $400 minimum deduction for some taxpayers with at least $1,000 of qualified business income from an active trade or business.

If you want to discuss the Section 199A deduction, please call me directly at 408-778-9651

• By Leon Clinton
• July 9, 2026