Are There Home Office Tax Deductions?

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February 15, 2018

According to a recent Gallup study, 43% of Americans report at least part of their time working from home. With more employees making the transition to home offices, the question inevitably comes up; What can I deduct?

The IRS has two requirements that need to be met in order to claim the home office deduction. The first requirement is the space you intend to claim needs to be used as a home office regularly and excessively. The second is your home office has to be the principal place of your business.

Regular and Exclusive Use

The IRS is very particular about this portion. You must use your home office frequently for it to be considered eligible. This means that if you use your laptop on the couch, kitchen table, and the bedroom, you’re not eligible for the home office deduction. To keep your audit risk low, make sure your home office is:

  • An established place where you complete the majority of your work
  • Preferably a separate room that is designated for work only
  • A place where you work for a minimum of 12 hours a week

Principal Place of Your Business

Flexibility is a benefit here when it comes to your home office. The IRS is fairly understanding to the location of your home office as long as it’s used primarily for work. That means your garage, a corner of the living room, or a spare bedroom can all be used as a home office. To take advantage of the home office deduction, here are a few things you should know:

  • Choosing the simplified home office deduction allows you to allocate a percentage of your home as your home office.
  • Separate stand-alone buildings can be deducted if they are used primarily for business purposes.
  • Your home office should not be a communal area such as a family computer room.

Follow these two guidelines and you’ll be well on your way to claiming your home office tax deduction. To help maximize your deductions, BIG can help you get the most back with our tax preparation services.

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