I’ve recently come upon an income tax question I didn’t know the answer to:
Let’s say you have the opportunity to rent one room of a two-bedroom house, one room of which is already being rented by someone else. Maybe you are subletting, or in some other way cooperatively paying the rent on the house as a whole. You have the opportunity, for an additional amount of rent, to rent an additional, smaller room in the house (one that would otherwise be common space) for exclusive use as an office for your business (you are a sole proprietor who uses Schedule C). How do you calculate the business expense for this office space rent?
- Do you take the full amount of the additional rent as a business expense?
- Or, do you consider the extra room a “home office” since it’s in the same building as your residence, and somehow calculate how much of your combined rent can be attributed exclusively to the office — and, if so, how do you make this calculation, especially with another rent-paying housemate in the picture and a mixture of common and housemate-exclusive space in the building?
My first stop was irs.gov, which has some information on the home office deduction. Unfortunately, nothing I found there seemed to unambiguously consider this particular case. Their examples all seemed to assume that one person, the business-owner, is also the sole renter or owner of the house or apartment, and is paying a single amount for a single occupancy space, part of which is being converted to business use.
So then I called the IRS telephone assistance hotline. Four times I called the IRS telephone assistance hotline. Four times I pressed 1 then 2 then 2 then 3, or maybe 1 then 3 then 1 then 2 then 3. Four times I talked with someone who heard my question and transferred me to the “small business department.” And four times I was put on hold, only to be cut off or hung up on after ten, twenty, or thirty minutes of listening to tinny, repetitive muzak.
So I called up my local IRS office, as I’m lucky enough to have one a short bus ride away, and asked to make an appointment to talk with someone about my question. Two days later they called back to tell me they couldn’t answer questions like mine — that it was “out of scope” for their office. They recommended I call the IRS telephone assistance hotline. I told them how that had gone and asked if they had any better ideas. They had none.
Yesterday I tried to get sneaky and call the IRS “Telephone Assistance for Businesses” line in the hopes that this would get me at least one step closer in the queue. No such luck. This time I had to press 1 then 5 then 1, but then had to do the same dance of talking with someone who transferred me to the “small business department.” A mechanical voice told me the expected on-hold time was “greater than thirty minutes,” but it turned out to be only about 25. Unfortunately, the woman I eventually spoke with, “Jan” (#0843180), was having phone problems of some sort (or maybe I was), and she had difficulty hearing what I was saying, finally couldn’t hear me at all, then I could no longer hear her either, and after a couple of minutes of frustrating silence, I was cut off again.
All I got out of Jan was 1) that because Congress is still in session, they can’t tell anyone definitively what the law is going to look like when it comes time to file taxes, and 2) the IRS is unwilling to advise me on what the best thing to do would be in this circumstance (I protested that it wasn’t the “best” thing I was looking for, but the “correct” thing).
She had just begun walking me through what sounded like it would be a long, long flowchart (“Were you a U.S. citizen at the end of 2011?”) when our audio troubles became insurmountable.
So now I know what that process feels like. It’s encouraging to me to know that people who try to deal person-to-person with the IRS are likely to come away from the experience frustrated, infuriated, and yet more cynical about their government and its bureaucracies.
An audit issued showed that 22% of calls to the taxpayer assistance line “hung up or were disconnected before receiving service.” But that was more people than the 20% who actually received person-to-person service — the rest were either shuffled off to other lines, called or were left on hold until after hours, or were presumed to have successfully gotten their questions answered by pressing buttons and listening to recordings. “A reduction in funding for toll-free telephone and correspondence services resulted in a Level of Service goal for of 61 percent, compared to 70 percent the IRS achieved in . The last year the IRS provided a Level of Service over 80 percent was . This decrease translates to longer customer wait times, increased customer abandons, and an increased number of customers redialing the IRS toll-free lines for service.” (“Level of Service” is vaguely-defined in IRS documentation as “the relative success rate of taxpayers who call for live assistance on the IRS toll-free telephone lines.”)
I may try the Taxpayer Advocate Service to see how that process works.
It may be that in the same way that you don’t call up the Justice Department to find out what’s illegal this week, but you’re supposed to hire a lawyer if you’re confused, the correct thing for me to do with tax questions like mine is to consult a tax professional of some sort. But the IRS seems loth to admit that they’re incapable of helping ordinary people with their ordinary tax questions (and mine doesn’t strike me as particularly out-of-the-ordinary).