Home Office Deduction

Home Office Deduction

Do you work from home?  In past years, if you were an employee who worked from home, you could deduct your home office expenses.  While tax reform didn’t completely change the home office deduction, it did suspend miscellaneous itemized deductions that were claimed on Schedule A.

Among those suspended items is the home office deduction.  That means if you work from home as an employee for someone else, you currently can’t take the home office deduction.  However, if you’re self employed you may still qualify.

home office deduction

There are two basic requirements to qualify for the home office deduction:

  1. Regular and exclusive use.  In other words, you must regularly use your home office for conducting business and it must be used for business purposes only.
  2. Principal place of your business.  This means your home office should be the main place from where you run your business.  If you run your business at another location as well as out of your home, you may still qualify if you primarily and regularly use your home office. 

home office deduction

If you meet these qualifications, you might be asking how to calculate your home office expenses.  There are two options.  The primary option values your home office by measuring actual expenditures as a percentage of your overall home expenses.  You can deduct mortgage interest, taxes, maintenance and repairs, insurance, utilities and other expenses.

With the simplified option, however, you aren’t deducting actual expenses.  Instead, the square footage of your home office space is multiplied by a set rate of $5 per square foot for up to 300 square feet of space.

If you meet the two basic requirements above, don’t forget to claim your home office deduction.  If you have more questions, feel free to reach out to us!