If you have an office in your home, you may be wondering how you can use it as a tax deduction. First, you need to determine if your office qualifies for the deduction. You can claim the home office deduction if:
- Your home office is your primary place of work, and you do not have an office in another location (meaning you don’t have one “at work” and one “at home”)
- You telecommute at the request of your employer (not because it is easier for you)
- You are self-employed and make as much as your deduct (meaning you can’t do this if your business would be better described as an hobby that costs more than you make)
- The space is used exclusively as an office and is not part of your living room, guest room, kitchen, etc.
For example, this is my current home office space:
Even though I spend a lot of time here, I can’t call it a home office because it is part of a bedroom. Plus, I also have an office at the university.
On the other hand, this is my husband’s office:
He is self-employed and does not have an office in any other location. His office is a whole separate building in our backyard. So, yes, we do claim this as a home office deduction.
If you have a qualifying home office, you can deduct some office expenses based upon its percent of your entire home’s square footage (office sqft / home sqft). You can include expenses such as real estate tax, mortgage or rent payment, insurance, repairs, and utilities. Be sure to keep good records of each of these expenses because tax payers who utilize the home office tax deduction are statistically more likely to have an audit.