What is a Home Office Expense?

IRS Link to Form — Found Here

The home office expense deduction allows people who work from home to take a tax deduction reflecting the loss of square footage in their home for the purpose of doing business there.

The space must be used exclusively for doing business on a regular basis and it must be the principal place of business, not just a place to work outside of the actual office. Many people fail to file for the home office expense deduction because they believe it will be more trouble than its worth or that it may even trigger an IRS audit of their reporting.

People work from home now more than any other time in history due to the capabilities afforded to them by technology today. It is now no longer necessary to go into a office building to get business done. It is still necessary to have a place to focus, to keep work-related items and materials, and to have a workspace.

This space of course reduces the amount of space that can be used for home-life, which is the primary reason for paying rent or mortgage payments — and, yes, the deduction is available to both renters and owners. The calculation involves figuring out the percentage of the home’s square-footage that is dedicated workspace.

It might be an entire room of the house or a garage, or some other arrangement. The person must spend at least half of their time at work working in the home office. Other work related expenses that have to do with the home, such as an extra phone line or water usage, can also be deducted.

More information about the deduction can be found here on the IRS website.