Home Office Tax Deduction
The home office tax deduction allows eligible taxpayers who use part of their home regularly and exclusively for business purposes to deduct related expenses from their income. This applies to both homeowners and renters.
Key requirements:
Regular and exclusive use: A specific area of your home must be used solely for conducting business on a regular basis. i.e. the kitchen table doesn’t work.
Principal place of business: The home office must be your main place of business, or you must use it to meet clients or perform administrative tasks if you have no other fixed location. Though you can have multiple locations.
Deduction methods:
Simplified method: Allows a deduction of $5 per square foot of home office space, up to 300 square feet (maximum $1,500).
Regular method: Involves calculating actual home expenses (like mortgage interest, utilities, insurance, depreciation, and maintenance) and applying the percentage of the home used for business. This is the only method available to S-Corporation owners.
Who qualifies:
Self-employed individuals can generally claim this deduction. Small business owners that file on Schedule C, unreimbursed partnership expenses (from a K-1) and S-Corporation owners through an accountable plan.
Employees typically cannot claim this deduction.
If you have questions about the home office tax deduction or how to set up an accountable plan for your S-Corporation, please contact info@bluetaxplan.com