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Tax Savings: Deduct Your Home Office Expenses for Small Business

If you’re self-employed and use your home office exclusively and regularly for that work, you may be able to deduct from your federal taxes a portion of home-related expenses, such as mortgage interest, property taxes, homeowners’ insurance, and utilities.

But be mindful of details, experts say.

“If you use your dining table for work, you can’t take off that cost because it’s not only for work but if you buy a desk and use it only for work in your home, you can take off that cost.

 How to Deduct Your Home Office

The IRS offers two methods to calculate your home office deduction: simplified or regular.

Simplified home office deduction:

You can deduct $5 for each square foot, with a maximum of $1,500 or 300 square feet per year for your dedicated home office area – but only if it’s used for the entire year. If you use that space only part-time, you need to adjust the amount accordingly.

Regular direct home office deduction:

This could result in a larger deduction. However, it requires you to track all your home office expenses, including any costs for repairing and maintaining the space. If you had an extra bedroom and fixed it up to become an office—like adding shelves and painting it for Zoom calls— all those things count as home office expenses

You can also claim deductions for a portion of other expenses such as rent or property taxes, home depreciation, and utilities — based on the proportion of the space to the rest of your house.

For example:  

If your office is 250 square feet and your home is 1,000 square feet, you’d deduct 25% of your allowable expenses (250/1,000 = 0.25). If you had $10,000 in eligible home-related expenses, you could claim up to $2,500 in deductions. There isn’t a limit on how much you can deduct.

Who Can Deduct a Home Office?

Employees are not eligible to claim the home office deduction. There are certain expenses taxpayers can deduct. These may include:

Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited. The term “home” for purposes of this deduction includes:

It also includes structures on the property like,
✅ An unattached garage
✅ Studio
✅ Barn
✅ Greenhouse
It doesn’t include any part of the taxpayer’s property used exclusively as a hotel, motel, inn, or similar business.

Home Office Supplies

Can I deduct supplies?

Yes, if they are both common to your industry and necessary to help your business — and you have receipts. Items you might deduct include cell phones, laptops, printers, and other office supplies.

Because these things are worth a lot, you can simply deduct the whole cost as an expense. You don’t have to list it as an asset. Just put it down on Schedule C as an office or supplies expense in the ‘other expense’ part. Remember, though, if you also use any of these items for personal things, only the proportion used for work should be deducted.

For example, if you buy a $2,500 laptop but use it 40% of the time for work, you can write off $1,000.

The home office deduction, calculated on Form 8829, is available to both homeowners and renters.


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