When tax season rolls around, many of us start hunting for whatever tax deductions we can write off our annual bills. You might wonder if your home’s alarm or security system is eligible. The short and simple answer is no. Unfortunately, an alarm or security monitoring system you use strictly to protect your home and personal property is not considered a tax-deductible expense. But what if you run a business out of your home? That’s where the answer gets a little more complicated.
If a part of your home is reserved for a service you offer, you may be able to deduct at least part of your security costs. However, just because you run a business out of your home does not automatically qualify you to deduct security costs from your taxes. The Internal Revenue Service (IRS) has additional requirements you have to meet and guidelines you must follow.
Tax deductions for self-employed individuals: What the IRS says
There are many advantages to running your own business, especially one that lets you work from home. You have the ability to choose your hours, and you don’t have to worry about commuting during rush hour traffic. However, it also comes with challenges. The self-employment tax rate is usually higher than the standard income tax rate. Usually, both the employee and the employer share the cost of medicare and social security taxes. The overall rate is 15.3%, but less than 8% of that normally comes out of an employee’s paycheck. When you are self-employed, you are responsible for covering all 15.3%.
Tax deductions lower the amount of your income that the government can tax. Income taxes are supposed to be based on an individual’s ability to pay. A person’s income alone does not adequately reflect their ability to pay unless other expenses are factored in. Tax deductions allow you to remove these expenses from your income before determining your tax bill—the money you need to spend on those expenses is not taxable income. All taxpayers can claim either the standard deduction or their itemized deduction, whichever is higher. If you are a freelancer, contractor, or another self-employed individual, you need to invest a certain amount of your income back into your business in order to keep making money.
Fortunately, there are many deductions the self-employed can claim to help lower their tax bill. Some of these specifically pertain to the expenses associated with maintaining a home office and include a portion of the rent, utilities, mortgage, or property taxes. If your home security system is helping to protect your home office, then you may be able to deduct a portion of your monthly alarm monitoring fees as well.
There are a few things to keep in mind:
- You cannot deduct your whole alarm monitoring bill unless you only have alarms and cameras set up for your office.
- If you have specific cameras or alarms on the doors and windows of your office, you may only be able to deduct the cost of that portion of your system.
- You may have to prove that this space is uniquely used for business purposes.
- It is usually best if there is some kind of partition separating your workspace from the rest of the home. Ideally, this area should not be available for other family members to use for individual activities.
- Failure to prove unique use may result in your deduction being prohibited.
However, there are gray areas. Suppose you run a daycare out of your home. It is reasonable that for the safety of the children you watch, you would need a security monitoring system in the event of an emergency. It is likely that the children use the same areas during the day that your family uses outside business hours, like the kitchen, backyard, and living or playrooms. In this case, you would not have to prove exclusive use. You will probably only be able to deduct a portion of your monthly monitoring costs as opposed to the whole bill. Since your business is not confined to a single area of your house, you can determine your deduction based on how many hours each week your daycare is open.
Allied Home Security
If you have a home or business you need to protected in the Houston area, call Allied. We offer installation, activation, and monitoring for homes, small businesses, and commercial facilities. Our UL-certified monitoring stations are staffed 24/7. Whether you need to reach the police, medical services, or a fire department, we’ve got you covered 24/7. We use cellular monitoring. So if an emergency happens while your internet is down, our monitoring stations will still be notified. All installations include free on-site training from our expert, certified technicians.
Allied Home Security takes pride in our superior customer service. We have an A+ rating with the Better Business Bureau. And also five-star customer ratings on Facebook, Yelp, Google, and Glassdoor. We were voted the #1 business in Texas by the J.D. Power and Associates Voice of the Customer award. Allied Home Security provides free minor repairs for all systems we install & $0 activation costs Whether you can deduct your security expenses, in whole or in part, from your tax returns or not, we make high-quality home security affordable.
Businesses, small and large, trust Allied Home Security to keep their Houston-area locations secure. We custom design each location’s security system to best meet their needs according to their industry’s requirements and risks. We allow business owners to monitor multiple locations from the same hub. If you’re constantly on the go, we can also provide on-the-go security alerts right to your smartphone.
For both residential and business security needs, contact Allied today for a free quote or to schedule a consultation.
