What is the Home Office Tax Deduction?
You may be eligible for a Home Office Tax Deduction if you use part of your home for a business use. This Home Office Tax Deduction can be used for all types of homes, and it is available for both homeowners and those who rent.
Who can use the Home Office Tax Deduction?
You can use this Home Office Tax Deduction if you use a portion of your home, either owned or rented, for your business. You must have a set room for regular and exclusive use for conducting your business.
You must also use this set, exclusive room for your principal place of business. If you own an office outside of the home but occasionally work from home, this wouldn’t be eligible for the home office deduction. However, if you own a location outside of the home but also use your home substantially and regularly for business, you can qualify for this deduction.
You may also qualify for this deduction if you are an employee and use part of your home for business use.
Options to Calculate Home Office Tax Deduction
There are two methods for filing for this deduction. First, the Simplified Option, allows you to multiply a prescribed rate by the allowable square footage (300 square foot maximum) of the office.
The current rate is $5 per square foot of home used for business.
Second, you can do the regular method which determines the actual expense for the home office including mortgage interest, insurance, utilities, repairs, and depreciation.
Here is more information on the Home Office Deduction provided by the IRS.
More Self Employed Topics
- How to Calculate Self Employment Tax
- Tax Deductions for the Self Employed
- What are the Tax Consequences of Deducting a Home Office if You Sell Your Home?
- What is the Self Employed Health Insurance Deduction?
- Tips for Filing Your Taxes with Self Employment Income