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home office

TL;DR

The home office deduction is generally deductible for self-employed individuals who use part of their home exclusively and regularly for business purposes, but it is not available for employees working from home unless they are self-employed.

Detailed Answer

To qualify for the home office deduction, the space must be used exclusively and regularly for business. This means a portion of your home must be dedicated solely to business activities and used on a consistent basis. The deduction can be calculated using either the simplified method, which allows a deduction of $5 per square foot up to 300 square feet, or the regular method, which involves calculating the actual expenses of maintaining the home office (e.g., mortgage interest, utilities, insurance) and applying the percentage of the home used for business. Common misconceptions include believing that occasional use or using a space for both personal and business purposes qualifies for the deduction, which it does not. Edge cases include those who use a separate structure on their property for business purposes, which can also qualify.

Where to Put It on the Tax Form

Schedule C, Line 30 for self-employed individuals. For partnerships or S corporations, it may be reported on Form 8829.

Real World Example

A freelance graphic designer uses a spare bedroom exclusively as an office, which is 150 square feet in a 1,500 square foot home. Using the simplified method, they can deduct $750 (150 sq ft x $5) for the year.

Calculation Required

A calculation is required for this deduction.

To calculate the deduction using the regular method, determine the percentage of your home used for business by dividing the square footage of the office by the total square footage of the home. Apply this percentage to the total allowable expenses (e.g., utilities, mortgage interest) to find the deductible amount.

Audit Risk & Documentation Tips

Moderate audit risk. Keep detailed records including a floor plan showing the office space, photos of the office setup, and records of expenses like utility bills and mortgage statements. Maintain a log of business activities conducted in the home office to demonstrate regular use.

IRS Reference

IRS Publication 587, Business Use of Your Home.

Relevant Industries

FreelancersConsultantsReal Estate AgentsIndependent ContractorsSmall Business Owners

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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 February 11, 2026

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