If you use your home for business, you may be able to deduct expenses for
the business use of your home. If you qualify, you can claim the deduction
whether you rent or own your home. You may use either the simplified method or
the regular method to claim your deduction. Here are six tips that you should
know about the home office deduction:
1. Regular and Exclusive Use. As a general
rule, you must use a part of your
home regularly and exclusively for business purposes. The part of your home
used for business must also be:
- Your principal place of
business, or
- A place where you meet
clients or customers in the normal course of business, or
- A separate structure not
attached to your home. Examples could include a garage or a studio.
2. Simplified Option. If you use the simplified
option, multiply the allowable
square footage of your office by a rate of $5. The maximum footage allowed is
300 square feet. This option will save you time because it simplifies how you
figure and claim the deduction. It will also make it easier for you to keep
records. This option does not change the rules for claiming a home office
deduction.
3. Regular Method. This method includes certain costs that
you paid for your home. For example, if you rent your home, part of the rent
you paid may qualify. If you own your home, part of the mortgage interest,
taxes and utilities you paid may qualify. The amount you can deduct usually
depends on the percentage of your home used for business.
4. Deduction Limit. If your gross income from the business
use of your home is less than your expenses, the deduction for some expenses
may be limited.
5. Self-Employed. If you are self-employed and choose the
regular method, use Form
8829, Expenses for Business Use of
Your Home, to figure the amount you can deduct. You can claim your deduction
using either method on Schedule
C, Profit or Loss From Business. See the Schedule C instructions
for how to report your deduction.
6. Employees. You must meet additional rules to claim the
deduction if you are an employee. For example, your business use must also be
for the convenience of your employer. If you qualify, you claim the deduction
on Schedule
A, Itemized Deductions.
For more on this topic, see Publication
587, Business Use of Your Home. You can view, download
and print IRS tax forms and publications on IRS.gov/forms anytime.
Each and every taxpayer has a set of fundamental rights they should be
aware of when dealing with the IRS. These are your Taxpayer
Bill of Rights. Explore your
rights and our obligations to protect them on IRS.gov.
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