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  HomeL.A. Wynn, PA - Certified Public Accountant   /  Blog  /  Entrepreneurship  /  Who Can Take the Home Office Deduction?
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Categories Entrepreneurship, Small Business, Tax Preparation Author L.A. Wynn, PA

To qualify for the home office deduction, you must meet two primary requirements set by the IRS:

  1. Exclusive and Regular Use

Your home office must be used exclusively and regularly for business purposes. This means:

  • The space must be a dedicated area of your home used solely for work.
  • It cannot be a shared space, like a dining table used for both work and family meals.
  • You must use the space consistently, not just occasionally for business activities.
  1. Principal Place of Business

Your home office must serve as your primary place of business, meaning:

  • It is where you conduct most of your business activities.
  • If you have multiple work locations, your home office must be used for essential tasks such as administration, bookkeeping, and client communications.
  • If you regularly meet clients or customers in your home office, this strengthens your eligibility.

Exceptions to the Exclusive Use Rule

While most business owners must meet the exclusive-use requirement, there are two key exceptions where the IRS allows flexibility:

  • Storage of Inventory or Product Samples – If you use part of your home to store inventory or product samples for your business, that space does not have to be used exclusively for business. However, it must be used regularly for storage purposes.
  • Daycare Providers – If you operate a licensed daycare facility from your home, you may qualify for the deduction even if the space is used for personal purposes when the daycare is closed.

How to Calculate the Home Office Deduction

There are two methods to determine the home office deduction:

  1. Simplified Method
  • The IRS allows you to deduct $5 per square foot of your home office, up to 300 square feet.
  • The maximum deduction under this method is $1,500.
  • This method is easier to calculate and requires less documentation.
  1. Regular Method
  • This approach is based on actual expenses, including mortgage interest, rent, utilities, insurance, and repairs.
  • The deduction is calculated based on the percentage of your home used for business.
  • While more complex, this method may result in a larger deduction for those with high home expenses.

Important Considerations Before Claiming the Deduction

  • Employees Cannot Claim the Deduction – Due to the Tax Cuts and Jobs Act (2017), employees working remotely do not qualify for the home office deduction (2018–2025). Only self-employed individuals and business owners can claim it.
  • Multiple Businesses – If you run more than one business from your home, each must meet the home office deduction requirements separately.

Maximizing Your Tax Savings

The home office deduction can lead to significant tax savings, but it’s important to ensure you meet IRS requirements. Keep detailed records, track expenses, and consider working with a tax professional to maximize your deduction while staying compliant.

If you’re unsure whether you qualify for the home office deduction, give L.A. Wynn, PA a call at 919.973.0714.

L.A. Wynn, PA provides efficient and expert solutions for small and medium sized businesses and for individuals who need the assistance of a professional, yet personable, partner who shares your vision for growth and success.