Working from home comes with many perks: zero commute, comfy-casual dress code, and unlimited fridge access. Another perk? The ability to deduct your home office come tax season.
The home office tax deduction is available to homeowners and renters (yes, renters, you can get in on this too!) who are self-employed or employed with a company that requires employees to work from home or store products in their home. To qualify for a home office tax deduction, the space must be used for the benefit of your employer, not for your convenience — for example, if you have a nearby office provided by your employer but like to take work home with you at night. The IRS has two main stipulations for home offices to be considered tax-deductible: exclusivity and regularity. Your office must meet both requirements.
Exclusivity
First, the space must be used only for your work. This stipulation means if your home office is a desk in your kitchen or also a place for your buddies to get together for band practice, your home office does not check the exclusivity box. But don’t count out home office spaces that aren’t a completely separate room. For instance, if you have a guest bedroom with a desk that you use for your office, you can claim the portion of the room that contains the desk. But note that you can’t use that desk for personal use — your kids shouldn’t be doing their homework there. The IRS is strict about that stipulation.
Regularity
The second biggie to qualify for the home office tax deduction is regular use. The term “regular” is difficult to define. In fact, you may be selling yourself short in this area. Regular use doesn’t have to mean you’re in your home office from 9 to 5 every day. To meet this requirement, your home office just has to be a regular part of your business or your job. So if you’re in the field three days a week but doing admin tasks in your home office for the two other days, you’re golden.
How to file
Does your home office meet both requirements? Good! Now let’s look into how you can claim your home office tax deduction. There are two methods for filing: simplified and regular. This FAQ list can help you compare the methods so you can decide which is best. Essentially, the simplified method allows you to take standard deductions, while the regular method uses actual expenses to calculate your home office tax deduction.
No matter how you choose to file, the most important thing is to keep accurate records of your home office use, and be wary of stretching your claim too far and raising a red flag. If you’re unsure about whether your home office qualifies for a tax deduction or certain expenses can be included, refer to the U.S. Treasury Department’s Publication 587, which is basically the go-to guide for home office tax deductions. Of course, when all else fails, consult a tax professional to be sure you’re filing correctly.
