Beginning in tax year 2013 (returns filed in 2014), taxpayers may use a simplified option when figuring the deduction for business use of their home. Show
Note: This simplified option does not change the criteria for who may claim a home office deduction. It merely simplifies the calculation and recordkeeping requirements of the allowable deduction. Highlights of the simplified option:
Comparison of methodsSimplified OptionRegular MethodDeduction for home office use of a portion of a residence allowed only if that portion is exclusively used on a regular basis for business purposesSameAllowable square footage of home use for business (not to exceed 300 square feet)Percentage of home used for businessStandard $5 per square foot used to determine home business deductionActual expenses determined and records maintainedHome-related itemized deductions claimed in full on Schedule AHome-related itemized deductions apportioned between Schedule A and business schedule (Sch. C or Sch. F)No depreciation deductionDepreciation deduction for portion of home used for businessNo recapture of depreciation upon sale of homeRecapture of depreciation on gain upon sale of homeDeduction cannot exceed gross income from business use of home less business expensesSameAmount in excess of gross income limitation may not be carried overAmount in excess of gross income limitation may be carried overLoss carryover from use of regular method in prior year may not be claimedLoss carryover from use of regular method in prior year may be claimed if gross income test is met in current yearSelecting a Method
More information on both methods can be found in Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Full details on the Simplified Method can be found in Revenue Procedure 2013-13. Like millions of other Americans, you may be working from home a lot. Perhaps you're even a full-time remote employee. There are certainly financial advantages to working from home, like saving money on commuting costs, work clothes and lunches. But, on the other hand, there are probably other unreimbursed expenses draining your wallet. For instance, you're probably paying for printer paper and ink, note pads, and other office supplies. Plus, your electric and other utility bills are likely higher since you're at home all day. And maybe you had to upgrade your Wi-Fi, too. Wouldn't it be nice if you could claim a tax deduction for your home office expenses on your next tax return? Tax Changes and Key Amounts for the 2022 Tax Year Well, maybe you can. Some people can deduct their business-related expenses, and there's something called the "home office deduction" that lets you write off expenses for the business use of your home. Whether or not you can claim these tax breaks depends on your employment status. See if you're one of the fortunate ones who can cut their tax bill or if you're out of luck. Employees Miss OutIf you're a regular employee working from home, I'm sorry to say that you can't deduct any of your related expenses on your tax return. Subscribe to Kiplinger’s Personal FinanceBe a smarter, better informed investor. Save up to 74%  Sign up for Kiplinger’s Free E-NewslettersProfit and prosper with the best of Kiplinger’s expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail. Profit and prosper with the best of Kiplinger’s expert advice - straight to your e-mail. Sign up W-4 Form: Extra Withholding, Exemptions, and Other Things Workers Need to Know Before 2018, you could claim an itemized deduction for unreimbursed business expenses, including expenses for the business use of part of your home if they exceeded 2% of your adjusted gross income. However, this deduction was temporarily suspended by the 2017 tax reform law. It's schedule to go back on the books in 2026 – but we'll have to wait and see if that schedule is changed in any way before then. Self-Employed People Cash In (Maybe)If you're self-employed, you may be in luck. Self-employed people can deduct office expenses on Schedule C (Form 1040) (opens in new tab) whether they work from home or not. This write-off covers office supplies, postage, computers, printers, and all the other ordinary and necessary stuff you need to run an office. What Are the Income Tax Brackets for 2022 vs. 2023? Plus, the home office deduction may also be available if you're self-employed — if you can satisfy all the requirements. This tax break covers expenses for the business use of your home, including mortgage interest, rent, insurance, utilities, repairs, and depreciation. It doesn't matter what type of home you have, either — single family, townhouse, apartment, condo, mobile home, or even a boat. You can also claim the deduction if you worked in an outbuilding on your property, such as an unattached garage, studio, barn, or greenhouse. But you can't claim the home office deduction for any part of your home or property used exclusively as a hotel, motel, inn, or the like. The key to the home office deduction is to use part of your home "regularly and exclusively" as your principal place of business. If you only work from home for part of the year, you can only claim the deduction for the period that you can satisfy the "regularly and exclusively" requirements. "Regular use" means you use a specific area of your home (e.g., a room or other separately identifiable space) for business on a regular basis. Incidental or occasional use of the space for business doesn't count. "Exclusive use" means you use a specific area of your home only for your trade or business. The space doesn't have to be marked off by a permanent partition. You can't claim the home office deduction if you use the space for both business and personal purposes. However, the exclusive use requirement might not apply if you use part of your home:
The space must also be used:
(See IRS Publication 587 (opens in new tab) for more information about these and other requirements for the home office deduction.) What's Your Standard Deduction? If you qualify, there are two ways to calculate the home office deduction. Under the "actual expense" method, you essentially multiply the expenses of operating your home by the percentage of your home devoted to business use. If you work from home for part of the year, only include expenses incurred during that time. Under the "simplified" method, you deduct $5 for every square foot of space in your home used for a qualified business purpose. Again, you can only claim the deduction for the time you work from home. For example, if you have a 300-square-foot home office (the maximum size allowed for this method), and you work from home for three months (25% of the year), your deduction is $375 ((300 x $5) x 0.25). Tax Tip: If you use the simplified method, you can't depreciate the part of your home used for business. However, to the extent you qualify, you can still claim itemized deductions for mortgage interest, real property taxes, and casualty losses for your home without allocating them between personal and business use. The deduction is claimed on Line 30 of Schedule C (Form 1040) (opens in new tab). If you use your home for more than one business, file a separate Schedule C for each business. Don't combine your deductions for each business on a single Schedule C. If you use the actual expense method to calculate the tax break, also complete Form 8829 (opens in new tab) and file it with the rest of your tax return. If you use more than one home for business, you can file a Form 8829 for each home or use the simplified method for one home and Form 8829 others. Combine all amounts calculated using the simplified method and amounts calculated using Form 8829, and then enter the total on Line 30 of the Schedule C you file for the business. Employees with a Side Gig?If you're an employee at a "regular" job, but you also have your own side hustle, you can claim deductions for business expenses and the home office deduction for your own business — if you meet all the requirements. Being an employee doesn't mean you can't also claim the deductions you're entitled to as a self-employed person. Can you get a tax deduction for a home office?The home office deduction allows qualified taxpayers to deduct certain home expenses when they file taxes. To claim the home office deduction on their 2021 tax return, taxpayers generally must exclusively and regularly use part of their home or a separate structure on their property as their primary place of business.
What expenses can be deducted for home office?You can deduct mortgage interest, taxes, maintenance and repairs, insurance, utilities and other expenses.
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