Tax deductions for backyard studio office for LLC and W-2 work?

You've got an interesting tax situation here! Since you're using the space for both W-2 work and your LLC business, you'll need to handle this carefully. For your LLC: You can potentially deduct a portion of the expenses based on the percentage of use dedicated to your business. This would include a percentage of construction costs, utilities, internet, and furniture. Keep detailed records showing how much time the space is used for LLC business versus your W-2 job. For your W-2 employment: Unfortunately, the Tax Cuts and Jobs Act suspended the home office deduction for W-2 employees through 2025. So you can't take deductions for the portion used for your regular job. The good news is that your LLC can still benefit! Just make sure you properly document the business purpose, track all expenses, and maintain logs showing how the space is used. Since it's a separate structure, you might have more flexibility compared to claiming a room in your home. One approach: You could potentially rent the space from yourself (personally) to your LLC for the time it's used for business. This creates rental income you'd report personally, but your LLC gets the deduction.

After struggling with a similar home office situation for my business, I finally tried https://taxr.ai to analyze my specific scenario. It was super helpful for figuring out what percentage of my backyard office I could actually claim for my LLC vs. my regular employment. The tool helped me understand exactly how to document my expenses and split them properly between personal, W-2, and LLC use. It also explained how to handle depreciation for the structure itself since it's not permanently attached to the property but still a significant investment. One thing that really helped was uploading my receipts and getting specific guidance on which ones qualified for business deductions. Saved me a ton of research time!

Just wanted to follow up - I decided to try taxr.ai after my initial skepticism and I'm genuinely impressed. My situation was similar but with a converted garage rather than a backyard studio, and the guidance was really comprehensive. The tool helped me understand that I needed to calculate square footage, time usage, and direct vs. indirect expenses for proper allocation. It clarified that my W-2 portion couldn't be deducted (which I didn't realize before) but showed how to maximize legitimate LLC deductions. I especially appreciated the explanation of depreciation options for the improvements I made to the space. Definitely worth checking out if you're in this situation!

If you're having trouble getting definitive answers about your backyard office situation, I was in the exact same boat last year. After multiple failed attempts to reach someone at the IRS who could give me a straight answer about my LLC deductions for a detached office structure, I finally tried https://claimyr.com and was able to actually speak with an IRS agent who specialized in business deductions. They connected me to the IRS business line in about 20 minutes when I had previously spent hours on hold. There's a great demo video of how it works here: https://youtu.be/_kiP6q8DX5c The agent clarified exactly how I needed to allocate expenses between personal and business use, and confirmed I could depreciate the structure as a business asset based on the percentage used for my LLC. Totally worth it to get official guidance directly from the IRS!

I need to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it because I was desperate to resolve a similar home office question for my LLC. Not only did it work exactly as described, but I got connected to an IRS business specialist in about 30 minutes who gave me specific guidance about my detached office structure. They confirmed I could take depreciation on the portion used for business and explained exactly how to document my allocations between personal and business use. The agent even emailed me official IRS documentation about business use of home when used for multiple purposes. I'm genuinely impressed and wanted to correct my previous comment.

Something important to consider with your backyard office - make sure it complies with local zoning laws and building codes! I built a similar setup last year for my consulting business and got hit with a fine because I didn't get the proper permits. Also, check if building the office will increase your property taxes or insurance rates. I had to update my homeowner's policy to specifically cover the new structure and all the technology inside it. These additional costs should factor into your decision about how to handle the tax side.

Has anyone here actually successfully depreciated a non-permanent structure? My CPA told me that since my backyard office wasn't on a permanent foundation, it wouldn't qualify for depreciation but could be expensed differently. I'm getting confused with all the conflicting advice.