Taxpayers who use their home for business may be able to deduct expenses for
the business use of it. Qualified persons can claim the deduction whether they
rent or own their home. Use the simplified method or the regular method to
claim a deduction.
Here are six tips to keep in mind about the home office deduction:
1. Regular and Exclusive Use. Generally, taxpayers must use
a part of their home regularly and exclusively for business purposes. The part
of a home used for business must also be:
- A principal place of
business, or
- A place where taxpayers
meet clients or customers in the normal course of business, or
- A separate structure not
attached to the home. Examples could include a garage or a studio.
2. Simplified Option. To use the simplified
option, multiply the allowable square footage of the office by a rate of
$5. The maximum footage allowed is 300 square feet. This option will save time
because it simplifies how to figure and claim the deduction. It will also make
it easier to keep records. The rules for claiming a home office deduction
remain the same.
3. Regular Method. This method includes certain costs paid
for a home. For example, part of the rent for rented homes may qualify. For
homeowners, part of the mortgage interest, taxes and utilities paid may
qualify. The amount deducted usually depends on the percentage of the home used
for business.
4. Deduction Limit. If the gross income from the business
use of a home is less than expenses, the deduction for some expenses may be
limited.
5. Self-Employed. Taxpayers who are self-employed and
choose the regular method should use Form
8829, Expenses for Business Use of Your Home, to figure the amount to
deduct. Claim the deduction using either method on Schedule C, Profit or Loss
from Business. See the Schedule
C instructions for how to report the deduction.
6. Employees. Employees must meet additional rules to claim
the deduction. For example, business use must also be for the convenience of
the employer. If qualified, claim the deduction on Schedule
A, Itemized Deductions.
For more on this topic, see Publication
587, Business Use of Your Home. View, download and print IRS tax forms and
publications on IRS.gov/forms
anytime.
All taxpayers should keep a copy of their tax return. Beginning in 2017,
taxpayers using a software product for the first time may need their Adjusted
Gross Income (AGI) amount from their prior-year tax return to verify their
identity. Taxpayers can learn more about how to verify their identity and electronically
sign tax returns at Validating
Your Electronically Filed Tax Return.
Additional IRS Resources:
- FAQs
- Simplified Method for Home Office Deduction
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