Home Office Deduction: Can You Claim It?
Introduction
Do you work from home? You might be able to claim a home office deduction and save money on your taxes. But not every workspace qualifies. Here’s what you need to know to make sure you’re eligible.
What Counts as a Home Office?
The IRS says your home office must meet two rules:
- Regular and exclusive use — it’s used regularly and only for work
- Main place of business — it’s where you mostly work or manage your business
This could be a spare bedroom, a converted garage, a basement office, or even a shed — as long as it meets those rules. A corner of your dining table doesn’t count if you also use it for meals.
Expenses You Can Deduct
If you qualify, you can deduct a portion of expenses related to your home:
- Rent or mortgage interest
- Property taxes
- Utilities (electricity, water, gas)
- Homeowners insurance
- Repairs and maintenance
- Internet costs
You can calculate this two ways:
- Regular method — figure out the actual expenses and the percent of your home used for business
- Simple method — take $5 per square foot (up to 300 square feet)
What Doesn’t Count
Some spaces won’t qualify, even if you work there sometimes:
- A shared space like a living room or kitchen
- A space used for both work and personal activities
- A home office you use for work but your main office is elsewhere
Example of a Home Office Deduction
Let’s say your home office is 200 square feet and your home is 2,000 square feet. That’s 10% of your home. If your total eligible home expenses are $15,000 for the year, you could deduct $1,500 using the regular method — or $1,000 using the simple method (200 sq ft x $5).
Why the Home Office Deduction Matters
This deduction lowers your taxable income, which means you pay less tax. But claiming it when you don’t qualify can raise red flags with the IRS. It’s important to follow the rules and keep good records.
Tips for Claiming the Deduction
- Take photos of your home office for your records
- Measure your workspace accurately
- Keep receipts for repairs and utilities
- Track internet and phone bills separately if you share them with personal use
How Wood Tax Advisory Can Help
We’ll help you figure out if you qualify for the home office deduction and calculate it the right way. We’ll also make sure you’re claiming all the deductions you’re allowed while avoiding IRS problems.
Schedule your free consult today and let us help you save money on your taxes!
