Whether you’re sorting out home-office complexities for the first time or are an old hand at it, don’t overreach. You qualify only if you use a portion of your home exclusively and regularly for your business. Generally, this is a separate room.

The IRS concedes that the office can be part of a room. But the burden is on you to establish that the separation is clear—by a partition, perhaps—and that no personal activities take place within the business area. Understandably, IRS examiners look closely at deductions for offices housed in studio apartments.

The IRS says you flunk the exclusive test when, for example, the office is where you stash your cat’s litter box or your children do their homework or play games on personal computers. But the agency doesn’t mind when you have personal conversations on office phones or computers. And it doesn’t insist that you rush outside whenever family members need to ask questions or Fluffy craves some Meow Mix.

The IRS does require the office to be your “principal place of business.” That means the place where you regularly meet clients or customers or conduct your business’ key administrative or management activities, provided there’s no other fixed location where you conduct such activities for that business.

There’s no requirement that your endeavor has to be a full-time business. It can be part time, as when you have a full-time job elsewhere and moonlight from your home office as a writer.

Business driving: Writers get to claim deductions for all kinds of trips—from driving to meet clients, to attending meetings and conferences, to just picking up office supplies. The IRS doesn’t allow deductions for commuting, as when you drive from your home to your office (or another regular place of business) and back again to your home. Calling clients while driving doesn’t transform car trips from commuting to business.  

More favorable rules apply when an office within your home qualifies for the home-office deduction. Nondeductible commuting between home and other work locations morphs into deductible business driving.

You have two options for deducting car operating costs. Use either the actual cost or the standard mileage method. The actual cost method allows you to deduct all of the vehicle’s operating costs. The standard mileage allowance uses a flat rate. For 2010, it’s 50 cents per mile. Whichever method you select, also claim parking fees and bridge or highway tolls.

Make sure to claim all of your allowable expenses when you drive to writers’ conferences or other gatherings and are accompanied by a spouse, significant squeeze or some other person who tags along only for fun. Deduct the total cost of driving. You incur the same driving expenses whether your spouse accompanies you or not. Deduct lodging based on the single-rate cost of similar accommodations for you—not half the double rate you actually paid for the two of you. To help corroborate your write-off, have the hotel bill note the single rate or ask for a rate sheet.

IRS auditors often question car expenses. They accept standard-rate deductions only when there are adequate records substantiating the miles driven. To be on the safe side, keep glove compartment diaries or other records that note why and how far you went and what you shelled out for parking and tolls. Diary entries are more persuasive when made close to when the trips occur, not when filing deadlines loom. Stay within the speed limits. IRS regulations prohibit deductions for traffic tickets.

First-year expensing: There are two ways for writers to write off of their outlays for purchases of equipment—for instance, computers and file cabinets. One is the "standard" route—recovering the cost through depreciation deductions over a period of years. Or they can opt for the frequently-overlooked tactic of "expensing" and deduct a specified amount of equipment in the year of purchase.

Regarding “expensing,” suppose a writer’s equipment purchases include $10,000 for cameras, computers, copiers, tape recorders and the like. Instead of the purchases being depreciated over five years, they can be immediately expensed. A $10,000 first-year deduction lowers taxes by $3,000 for an individual in a top federal and state bracket of 30 percent.

A complex rule prohibits a first-year deduction from exceeding the net (receipts minus expenses) taxable income from writing, calculated before the first-year deduction—meaning a writer can’t use a first-year deduction to create a loss that offsets income from sources other than writing.

Correcting past flubs: Justice Sutherland’s pro-taxpayer advice also should be heeded by writers who filed returns overlooking or understating write-offs for, say, their travel expenses. An accommodating IRS makes it relatively easy to correct mistakes without the need to completely redo the returns or go through any complicated red tape.

Naturally, the first step in seeking a refund from the IRS is to file a form—in this case, Form 1040X (Amended U.S. Individual Income Tax Return). Go to irs.gov for a 1040X and accompanying instructions on how to explain the reasons for the changes and how to compute refunds or balances due.

While you’re at the IRS site, download any forms or schedules for the year you’re amending. Also get Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, which has helpful information not contained in the instructions. Click on “Forms and Publications;” then click on “Previous Years.”

Let’s say you’re sending a 1040X for 2008 and claiming additional deductions on Schedule C (Profit or Loss From Business) for business travel to writers’ conferences. Or maybe you now realize you should’ve itemized deductions on Schedule A instead of taking the standard deduction. Along with the 1040X, submit corrected 2008 versions of Schedules A, C and SE (Self-Employment Tax).

Why is it important for you to revise Schedule SE? Claiming additional expenses doesn’t just reduce the amount you show as profit on Schedule C, thereby reducing the amount of your income subject to income taxes. It also reduces the amount of your income subject to self-employment taxes, as calculated on Schedule SE. Many writers get nicked more for self-employment taxes than for income taxes.