Many people hesitate to claim a home office deduction on their tax forms because they mistakenly believe that this will trigger an audit. This is not the case, however, particularly these days when working from home has become more and more common.
A person is eligible to take a home office deduction in several different circumstances. If one’s home is the main place where one does business or meets with clients or customers or if one runs a business from a separate building on the property, it is possible to take the deduction.
Even if one’s “home office” is one corner of a room in the house, the deduction should be taken. The key is that the space is exclusively used for conducting one’s business on a regular basis. The IRS provides guidelines for calculating the deduction allowed for the home office. The amount of space used can be calculated either based on overall square footage of the living space or on the number of rooms in the house. This deduction can be particularly valuable because not only can a portion of rent or the mortgage payment be deducted but part of utilities can be included as well.
One should make sure, however, that there are clear delineations between the home office and other parts of the house. If one works primarily at the dining room table or on a sofa in front of the television, home office deductions become much more difficult to legitimately claim and one may not be eligible. It’s best to designate one area of the home as one’s regular office and work from there as much as possible.
People who store inventory in their home or run day cares out of their homes must follow a separate set of guidelines.
People who are not self-employed but do the majority of their work for an employer from home may also claim this deduction. The distinction should be how much of the employee’s time truly is spent working at home. Taking work home from time to time and completing it there or taking the occasional work-at-home day when one is under the weather or to care for a sick child will not make one eligible.
The home office is an important deduction offered by the IRS. Anyone who works at home should consider this valuable deduction and claim it if they are eligible.