Can I Write This Off?

Can I write off rent if I work from home?

TL;DR

Yes, you may be able to deduct a portion of your rent if you use part of your home exclusively and regularly for your business.

Detailed Answer

The IRS allows a home office deduction if you use part of your home exclusively and regularly as your principal place of business, or as a place to meet with clients or customers in the normal course of your business. The deduction is calculated based on the percentage of your home that is used for business. For example, if your home office occupies 10% of your home, you can deduct 10% of your rent. However, there are limitations. The deduction cannot exceed the gross income from the business use of the home minus the sum of certain business expenses. It's also important to note that this deduction is not available if you only occasionally work from home or if you rent your home to your employer and use it as an office.

Where to Put It on the Tax Form

Report this deduction on Form 8829, Expenses for Business Use of Your Home, and attach it to your Schedule C, Profit or Loss From Business.

Real World Example

For example, if you rent a 1,000 square foot apartment and use 200 square feet as your home office, you can deduct 20% of your rent. If your rent is $1,000 per month, you could potentially deduct $2,400 ($1,000 x 20% x 12 months) for the year.

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. Divide the square footage of your home office by the total square footage of your home. Multiply this percentage by your total rent for the year to get the amount you can deduct.

Audit Risk & Documentation Tips

This deduction can be a red flag for an audit, so it's important to keep detailed records. Document the square footage of your home and your office, and keep copies of your rent payments. Also, take photos of your home office to prove it's used exclusively for business.

IRS Reference

IRS Publication 587, Business Use of Your Home

Relevant Industries

FreelancersSmall BusinessPhotographersConsultants