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The Home Office Deduction

April 1, 2014

If you use a part of your home exclusively for business activities, then you may qualify for the home office deduction. The part of your home must be used only for business activities and must be used regularly for business purposes. If you use a room or rooms in your house three times a week for a few hours, then you cannot claim this tax deduction.

The Simplified Option

Starting 2013, the IRS has made it easier for people to claim this deduction. The simplified option allows you to calculate the home office deduction without any complexity. The other method, which is the standard method, involves calculating of depreciation, determining of actual expenses and percentage of home used for business, which is complex and requires extensive calculation.

The simplified option, on the other hand, makes the calculation very simple. So, when you file taxes in 2014 and you qualify for the home office deduction, you can make use of the simplified option for calculating the amount of the deduction.

Qualifying Factors

To qualify for this deduction, the office part of your home must be the principal place where you do business. If you leave your home to go to an office for work and you also use a part of your home for business activities, you cannot claim this deduction. On the other hand, if you are a doctor and you home-visit patients, but also use a room of your home to attend to patients, then you can claim this deduction. Childcare facilities that use a room or two of their house to run their business can also claim this deduction.

You can also claim this deduction for a separate freestanding structure such as a barn, a studio or a garage, if you use the space regularly and exclusively for business activities. In essence, if you do not have another fixed place for conducting business other than your home or a rented property, then you can qualify for this tax deduction.

The home office deduction can be used by renters and homeowners alike. The type of home you are living in does not affect your status for claiming this deduction.

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