The home office deduction is a tax deduction that allows self-employed individuals and small business owners to deduct expenses related to the use of their home for business purposes.
To qualify for the deduction, the home office must be used regularly and exclusively for business purposes. This means that the space must be used as the principal place of business, or used regularly to meet with clients or customers.
There are two methods for calculating the home office deduction: the simplified method and the regular method.
The simplified method allows you to deduct $5 per square foot of the home office, up to a maximum of 300 square feet. This method is easy to calculate and requires less record-keeping.
The regular method requires you to calculate the actual expenses of your home office, including mortgage interest, property taxes, utilities, and repairs. You can deduct a percentage of these expenses based on the percentage of your home that is used for business purposes.
No, if you work from home as an employee, you cannot take the home office deduction. The Tax Cuts and Jobs Act of 2017 eliminated the home office deduction for employees.
Taking the home office deduction can increase your chances of being audited by the IRS. It is important to keep accurate records and only take the deduction if you meet the requirements.