Home Office Deduction

Home Office Deduction

The Home Office Deduction is a tax benefit that allows self-employed individuals or employees who work from home to deduct certain expenses related to the portion of their home used exclusively for business purposes.

To qualify for the deduction, the space must be used regularly and exclusively for business activities. There are two methods to calculate the deduction:

1. Simplified Method: This option allows a flat deduction based on the square footage of the home office (up to 300 square feet) at a prescribed rate per square foot.

2. Regular Method: This involves calculating actual expenses incurred in the operation of the home office, such as a portion of mortgage interest, utilities, repairs, and depreciation, based on the percentage of the home devoted to business use.

For example, if a taxpayer’s home office occupies 10% of their home’s total space, they may be able to deduct 10% of eligible home expenses on their tax return.