Am I Eligible for a Home Office Tax Deduction?

Man working at home office

As large portions of the world settle into a new normal, many people who previously worked in one central office now find themselves working from home. This comes with its own unique set of challenges and benefits. One of those benefits is the Home Office Tax Deduction.

Many people may be wondering if they now qualify for a tax break. Like anything tax related, the answer is somewhat complicated and depends on your employment status.

Do I Qualify for a Deduction?

First, and most important – if you are a W2 employee, you do not qualify for a home office deduction under the current tax law, even if you’re currently working from home. For the self employed, the rules are different. In this instance there are only two listed requirements for claiming a home office tax deduction:

  • Regular and exclusive use
  • Principal place of your business

This is pretty broad, and suggests that most people who are now working from home AND are self-employed in some form should easily qualify. For more information about qualifications surrounding specific fields of work click here.

In addition to claiming areas of your home, you can also deduct expenses from a studio, garage, or shed that is not inside of your home.

While this deduction was developed for homeowners, renters can use it as well as long as they meet the criteria.

Calculating Home Office Tax Deductions

Properly calculating and filing deductions is typically a difficult process. In 2013 the IRS tax code for home office deductions was simplified. We now have two options. Calculating your deduction can be done by using the following Simplified or Regular method:

Simplified Method

  • Portion of your home must be used exclusively as an office
  • Square footage can not exceed 300 feet
  • Claimed discount should be calculated at $5 per square foot
  • Total deduction can not exceed your gross income after expenses

Regular Method

  • Portion of your home must be used exclusively as an office
  • Calculate the % of home used as an office
  • Calculate actual yearly expenses
  • Add a depreciation deduction for portion of home used
  • Total deduction can not exceed your gross income after expenses

Both methods are similar, but the standard method allows you to claim larger spaces, as well as itemize your deductions. For a full list of steps and to find the proper forms head over to the IRS page on home office deductions.

Disclaimer: We’re smart, but we’re not tax professionals. This article is for informational purposes only. Please consult your tax professional before taking any deductions.

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Charlie O'Donnell

Charlie has been a member of Velocity Micro's team since 2018. He has a love for both graphic design and PC gaming.

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