Small Business Tax
The Home Office Deduction: Do You Qualify and How to Claim It
The home office deduction has an undeserved scary reputation. Claimed correctly, it's straightforward and legitimate. Here's how it works.
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01Who qualifies for the home office deduction?
The space must be used regularly and exclusively for business, and generally be your principal place of business. 'Exclusively' is the word that trips people up: a spare room used only for work qualifies; the kitchen table doesn't.
02The Simplified Method
Deduct a flat rate per square foot of office space, up to a cap. Minimal records and no tracking of individual home bills, which makes it ideal for smaller spaces. The IRS home office page lists the current rate.
03The Actual-Expense Method
Deduct the business percentage of real home costs: mortgage interest, utilities, insurance, repairs. More paperwork, but often a larger deduction for bigger offices.
04Who Can't Claim It
W-2 employees generally can't claim it for work-from-home under current rules. It's primarily for the self-employed and business owners.
05Documenting It Right
Keep a photo, a measurement, and the home bills if you use the actual method. Good records turn a 'red flag' into a non-issue.
Common questions
Does a spare room used only for work qualify?
Yes, if it is used regularly and exclusively for business and is generally your principal place of business. The kitchen table does not qualify, because it is not used exclusively for work.
Should I use the simplified method or actual expenses?
The simplified method deducts a flat rate per square foot with minimal records, which suits smaller offices. The actual-expense method deducts the business share of real home costs and takes more paperwork, but often produces a larger deduction for a bigger office.
Can a W-2 employee claim a home office?
Under current rules, generally not. The deduction is for the self-employed and business owners.
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Schedule a ConsultationThis article is general information, not individualized tax, legal, or financial advice. Every situation is different. Reach out and we'll look at yours directly.