Posted By Stephen Fishman , April 18, Posted in Self Employed. It allows you to deduct a part of your rent or mortgage payments, utilities and other home expenses. Yet, there are many requirements you must meet to qualify for the deduction. The key takeaways you should know are:.

A home office is a place in your home that is used exclusively for business purposes. The IRS offers taxpayers a home office deduction to offset a portion of the costs of their home offices. The home office deduction allows independent contractors, small business owners and others to lower their taxable income.

You must meet all three threshold requirements.

Can I take the home office deduction? - TurboTax Support

If you meet the requirements, you can take the deduction for a side business. But, this is only if the home office is for the convenience of the employer. The more space you devote only to your business, the more your deduction will be worth. The IRS only says you must use your home office for business on a continuing basis.

One court has held that 12 hours of use a week is enough. There is a good chance that you could also qualify with less use but no one knows for sure.

You can keep track of how much you use your home office by making simple notations on a calendar. The most common way to meet the extra rule is to show that you use your home as your principal place of business. How you do this depends on where you do most of your work and what type of work you do at home.

If you do all or almost all your work in your home office, your home is your principal place of business. This happens if you perform your most important business activities at home. Your principal place of business is where you spend more than half of your time if you work at many locations. You may deduct expenses for any part of your home you use only to meet with clients, customers or patients.

You must physically meet with others in this home location; phoning them from there is not enough. The meetings must also be a regular part of your business. The IRS has indicated that meeting clients one or two days a week is enough to meet its requirements. You can also deduct expenses for a separate free-standing structure. The structure does not have to be your principal place of business. Nor does it need to be a place where you meet patients, clients, or customers.

And you must store your inventory in a particular place in your house, like a garage or closet. You may only take the home office deduction if the home office is for the convenience of your employer.

This test is not met if using a home office is for your convenience or because you can get more work done at home. The reimbursement would not be taxable income so long as you account for your expenses. A typical example of the home office deduction is someone who works from home and has a specific office for those purposes. For example, an Uber driver can use a portion of their home to manage their business finances and still qualify for this write-off.

Likewise, a real estate agent can use a home office for work reasons and even if they have a brick-and-mortar office, can get this deduction. Such expenses fall into two broad categories: The entire amount of a direct home office expense is deductible. An indirect expense is a payment for something that benefits your entire home.

Most of your home office expenses will be indirect expenses, including:. The IRS has created an optional simplified method of calculating your home office deduction. Thus, all you need to do is measure the square footage of your home office. You can only use this method if your home office is square feet or less.

In general, deducting the actual expenses will get you a larger write off. The IRS says that personal commuting is not deductible.

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For professionals like Uber drivers, this can sting. The IRS commuting rule prevents you from writing off the cost of driving from home to pick up your first ride.

IRS Home Office Deduction: How To Get This Write Off

This same rule applies to the drive home from your last ride. That changes if you have a qualifying home office. Your home office qualifies as your principal place of business if:. You can increase your deductions for business trips with a qualifying home office.

For example, you can deduct driving from home to an outside office. Stephen Fishman is a self-employed tax expert and regular contributor to MileIQ. He has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for entrepreneurs, independent contractors, freelancers and other self-employed people.

He is the author of over 20 books and hundreds of articles, and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Visit Fishman Law and Tax Files for more information on his work. You should contact your own tax professional to discuss your situation. If I stop for personal groceries between a meeting with a client and my home office, is it still deductible miles?

Start logging your miles automatically using the MileIQ app. Click here to get a text with the link to the app. How It Works Refer-A-Friend Blog Dashboard Login Download. Self Employed Tax Pros MileIQ for Teams Small Business Tips MileIQ News. IRS Home Office Deduction: How To Get This Write Off. Latest posts by Stephen Fishman see all What You Need To Know About Backup Withholding - June 15, Keep An Eye On Your Payroll Service Provider - May 31, The W9 Form: What Small Business Owners Need To Know - May 30, Stephen Fishman Stephen Fishman is a self-employed tax expert and regular contributor to MileIQ.

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Get started by creating an account. Home-related itemized deductions apportioned between Schedule A and business schedule Sch. No, deduction cannot exceed gross income from business use of home minus business expenses.