The IRS keeps a close eye on this deduction, so make sure you only write off your office if it’s a dedicated home workspace used solely and regularly for your business. Be sure to follow the specifications below and be ready to back it up!
Have a home office? You can write it off with either:
The simplified option: Multiply the square footage of your office (up to 300 square feet) by the standard rate of $5.
- Want to see the exact IRS specifications? Click here.
The regular method: Add up the expenditures related to your home office, including:
Direct expenses, such as supplies for and repairs to your office. You can deduct these in full.
Indirect expenses, like your mortgage, insurance, and utilities. You’ll divide the total cost of these expenses by the percentage of your home that’s used for business.
- This may include your rent, but you must pass the test for exclusive and regular use for your business! Want to see the exact IRS specifications? Click here.
Remember regardless of the method chosen, there are two basic requirements for your home to qualify as a deduction: 1) regular and exclusive use and 2) principal place of your business.
- If your space isn't completely dedicated to your work, such as a bedroom or a kitchen table, it would not qualify for the deduction!
- You must have separate space or spare room for the deduction to qualify.
- Since not everyone has that kind of space, you may deduct a portion of a room, as long as that space is dedicated exclusively for your business!
- Important note: The IRS has been known to deny home office deductions on certain technicalities, such as having to pass through the home office space to get to another area of an apartment. If you're unsure, it would be best to consult a certified tax preparer!
While the cost of a home office or studio is deductible per IRS regulation, due to the tricky nature of this deduction unfortunately, we don't have a category for it in the app! You will need to keep track of this expense independently and report it on your Schedule C!