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I am interested in possible repercussions of not taking certain deductions:

I moved into my first home in 2004.

My gross 2004 income was 81% W2, 19% 1099.

The 1099 income is as a computer consultant. I work primarily at client sites but do research, documentation, some programming, billing and bookkeeping in my home office.

I have set up an office in my home that I feel meets the IRS tests for home office use (exclusive area, etc.)

Because the thought of an audit is unpleasant at best and home office is often spoken of as being an audit red flag I wonder about the advisability of using this deduction. I am still running the numbers both ways to see if there is a big enough reduction in taxes to make my partial year usage worthwhile.

My question: If I don't take any home office deductions this year are there any future repercussions? Particularly if I decide to reverse course and begin using the deductions in future years? Can the deductions be taken piecemeal (i.e.: portion of utilities but no house depreciation)? And again - any repercussions because of this?

Thank you,

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