Home Office Deduction | Internal Revenue Service
An overview of what exactly the home office tax deduction is, how to take To accurately keep track of your expenses, use QuickBooks Online. You do not have to meet the exclusive use test if either of the following apply. Business expenses not related to use of the home. . You do not have to meet the exclusive use test if either of the following applies. You use. Articles on keeping a business compliant with federal tax requirements. Even if you don't meet the home office tests, you can still deduct expenses for items . " Exclusive use" means that the business part of the home can not be used for any .
An employee may only deduct business use of the home expenses when he or she uses the business part of the home exclusively and regularly and for the employer's convenience. You also may take deductions for business storage purposes when the dwelling unit is the sole fixed location of the business or for regular use of a residence for the provision of daycare services; exclusive use isn't required in these cases.
Deductible expenses for business use of your home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs. In general, you may not deduct expenses for the parts of your home not used for business, for example, lawn care or painting a room not used for business.
Regular Method - You compute the business use of home deduction by dividing expenses of operating the home between personal and business use.
Publication (), Business Use of Your Home | Internal Revenue Service
You may deduct direct business expenses in full, and may allocate the indirect total expenses of the home to the percentage of the home floor space used for business. A qualified daycare provider who doesn't use his or her home exclusively for business purposes, however, must figure the percentage based on the amount of time the applicable portion of the home is used for business.
Self-employed taxpayers filing FormSchedule C. Simplified Option - While taxpayers can still figure the deduction using the regular method, many taxpayers may find the optional safe harbor method less burdensome. Under this safe harbor method, depreciation is treated as zero and the taxpayer claims the deduction directly on FormSchedule C. Instead of using Formthe taxpayer indicates the taxpayer's election to use the safe harbor option by making two entries directly on the Schedule C for the square footage of the home and the square footage of the office.
Deductions attributable to the home that are otherwise allowable without regard to business use such as qualified residence interest, property taxes, and casualty losses are allowed in full on FormSchedule A. Regardless of the method used to compute the deduction, you may not deduct business expenses in excess of the gross income limitation.
Under the regular method for computing the deduction, you may be able to carry forward some of these business expenses to the next year, subject to the gross income limitation for that year. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business.
The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers. Generally, deductions for a home office are based on the percentage of your home devoted to business use.
- Home Office Deduction Requirements
- Home Office Deduction
Additional tests for employee use. If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests discussed above plus: Your business use must be for the convenience of your employer. You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.
If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.
Publication 587 (2017), Business Use of Your Home
For a full explanation of tax deductions for your home office refer to PublicationBusiness Use of Your Home. In this publication you will find: Requirements for qualifying to deduct expenses including special rules for storing inventory or product samples.
Types of expenses you can deduct. How to figure the deduction including depreciation of your home. Special rules for daycare providers.
Tax implications of selling a home that was used partly for business. Records you should keep. Where to deduct your expenses including FormExpenses for Business Use of Your Homerequired if you are self-employed and claiming this deduction using the regular method.
The rules in the publication apply to individuals.