What does regularly and exclusively mean?
The space must be used on an ongoing basis only for business. A room that doubles as a guest bedroom or dining area usually does not qualify.
Tax guide
The Home Office Deduction
The home office deduction lets self-employed people deduct expenses for a part of their home that is used regularly and exclusively for business.
To qualify, a space in your home must be used both regularly and exclusively for your business, and it generally must be your principal place of business. A spare room used only as your office is a classic example, while a kitchen table also used for family meals would not qualify because it is not used exclusively for business.
There are two ways to calculate the deduction. The simplified method multiplies the square footage of your office by a set rate, making it easy with little recordkeeping. The regular method deducts the actual portion of home expenses, like rent, utilities, and insurance, based on the percentage of your home used for business. You can choose whichever gives the better result.
Note that employees generally cannot claim this deduction for working from home. It is primarily available to the self-employed who meet the requirements.
In short
Key points
- Available to self-employed people who meet the requirements
- The space must be used regularly and exclusively for business
- It generally must be your principal place of business
- The simplified method uses a set rate per square foot
- The regular method deducts an actual percentage of home costs
- Employees generally cannot claim it for remote work
FAQ
Frequently asked questions
Can employees take the home office deduction?
Generally no. Employees working from home usually cannot claim it. The deduction is mainly for self-employed people who meet the rules.
Which calculation method should I use?
The simplified method is easier with less recordkeeping, while the regular method may yield a larger deduction. You can compare and pick the better one.
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