Tips to Take Advantage of the Home Office Deduction

Are you a business owner who works from home? Do you have a home office that you work from daily? If you do use your home for business, you may be a qualifier for the home office deduction. That means that you can deduct expenses for the business use portion of your home. Whether your own or rent your home, you can qualify for the deduction. Also, if you qualify for the deduction you can use the simplified method or the regular method to claim your deduction. Take a look below to see IRS tips to take advantage of the home office deduction.

Top 6 Home Office Deduction Tips

1.) Must Use Your Home Office Regularly

To take advantage of the home office deduction, you must be using your home office regularly and exclusively for business. Also, the part of your home that you work out of must be:

  1. Your primary business office
  2. The place where you meet with clients or customers

2.) Know The Regular Method

If you choose to use the regular method, the home office deduction will include some costs that you paid for your home. That’s according to the IRS. For example, if you rent, part of your rent may qualify, and if you own your home, part of your mortgage interest, utilities, and taxes may qualify. The amount you can deduct depends on the amount of space you use in your home for business.

3.) Know The Simplified Option

According to the IRS, the simplified option is when you multiply the allowable square footage of your office by a rate of $5.

Also, note that the maximum footage allowed is 300 square feet. This option can save you time because it simplifies figuring out and claiming the deduction. It also makes it easier to keep your records.

4.) Self-Employed Rule

The IRS rules say that if you are self-employed and are choosing the regular method, use form 8829 – Expenses for Business Use of Your Home.

You can claim your deduction using either method on Schedule C.

See the IRS instructions on how to report your deduction.

5.) Deductions May Be Limited

Deductions of some of your expenses may be limited if your gross income from the business is less than your expenses.

6.) Employee

You must meet additional guidelines if you are an employee in this scenario.

For example, your business use must also be for the convenience of your employer. If you qualify, you claim the deduction on Itemized Deductions.

For more information about the home office deduction or specialty tax studies, please call (800) 236-6519.

Author

Engineered Tax Services

Engineered Tax Services

Recent Posts

logistics tax strategies

Why Cost Segregation Is a Key Logistics Tax Strategy 

In the demanding world of logistics, where every cent counts, cash flow optimization is crucial. Sure, it’s essential to trim expenses and enhance efficiency, but have you ever considered that a fresh take on your tax strategy could also lead to serious savings?   This is where cost segregation enters the picture. This blog post is

Read More »
irs

What You Need to Know About IRS Notice 2023-63

The Highlights Why It Matters While this notice doesn’t overhaul the R&D tax credit system, it does provides valuable clarification for companies engaged in research and development. We want to help you fully understand these changes so you can plan accordingly. The team at ETS offers specialized consultations, R&D tax credit analyses and compliance guidance

Read More »

Contact Us