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Can I deduct my home office expenses?

TL;DR

Yes, you can deduct home office expenses if you use part of your home exclusively and regularly for your trade or business.

Detailed Answer

The IRS allows for the deduction of home office expenses under certain conditions. The space must be used regularly and exclusively for business purposes and must be the principal place of your business. This means you can't use the space for personal activities, and it can't be a secondary location where you occasionally work. For example, if you are a freelancer and use a room in your home as your main place of work where you meet clients, you can deduct expenses related to that room. Expenses can include mortgage interest, insurance, utilities, repairs, and depreciation. However, the deduction is limited to the income generated by the business. If your home office expenses exceed your business income, you cannot use the excess expenses to create a loss for your business.

Where to Put It on the Tax Form

Schedule C (Form 1040), Line 30

Real World Example

A freelance graphic designer uses a room in her home exclusively and regularly for her business. She can deduct a portion of her rent, utilities, and maintenance costs based on the square footage of her home office.

Calculation Required

A calculation is required for this deduction.

To calculate the deduction, you need to determine the percentage of your home used for business. This is typically done by dividing the square footage of your office by the total square footage of your home. Then, you apply this percentage to your eligible home expenses.

Audit Risk & Documentation Tips

The home office deduction is often scrutinized by the IRS. Keep detailed records of your expenses and measurements of your office space. Also, be prepared to prove that your home office is your principal place of business and is used regularly and exclusively for work.

IRS Reference

IRS Publication 587, 'Business Use of Your Home'

Relevant Industries

FreelancersSmall BusinessTelecommutersConsultants

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 3, 2025

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