When do I qualify to take a deduction for the business use of my home?

If you use your home for work-related issues, you may be able to claim a deduction for the business use of your home. To qualify to claim expenses for the business use of your home, you must use part of your home for one of the following:

• The exclusive and regular principal place of business.
• The exclusive and regular place where you meet or deal with patients, clients, or customers in the normal course of your trade or business.
• On a regular basis for certain storage use.
• Exclusively and regularly in connection with your trade or business, in the case that the part of your home you are claiming is a separate structure which is not attached to your home.
• For rental use. See IRS Publication 527 for details and exceptions.
• As a daycare facility

If you are an employee, the IRS no longer allows you to claim the Business Use of Home as an itemized deduction. However, for tax years prior to 2018, if you use a part of your home for business, you may qualify for a deduction if you meet one of the above tests, AND both of the following:

• Your business use must be for the convenience of your EMPLOYER
• You must not rent any part of your home to your employer and use the rented portion for work related to your job with that employer.

If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.

Exclusive Use: 

For your use to be "exclusive", you must use a specific area of your home only for your trade or business. The area used for business can be a room or other separately identifiable space. The space does not need to be marked off by a permanent partition. You DO NOT meet the requirements for exclusive use if you use the area in question both for business and personal purposes.

If you use part of your home for storage of inventory or as a daycare facility, you may still qualify for a deduction for the business use of your home. For details on this, please reference IRS Publication 587.

Regular Use: 

To qualify as "regular use", you must use a specific area of your home for business on a regular basis. Incidental or occasional business use is not "regular use".

Trade or Business Use: 

For part of your home to qualify using this test, you must use it in connection with a trade or business. If you use your home for a profit-seeking activity that is not a trade or business, you cannot take the deduction. For example, using your home exclusively and regularly to read financial periodicals and reports or carry out similar activities related to PERSONAL investments, this is not in connection with your trade or business. Therefore, you cannot take the deduction for the business use of your home.

Daycare Facility: 

Even though you use the same space for nonbusiness purposes, you may be able to deduct the business use of your home if you use that space on a regular basis for providing daycare. To qualify for this exception, you must meet BOTH of the following:

• You must be in the trade or business of providing daycare for children, persons age 65 or older, or persons who are physically or mentally unable to care for themselves.
• You must have applied for, been granted, or be exempt from having a license, certification, registration, or approval as a daycare center under your state's laws. You do not meet this requirement if your application was rejected or your license or other authorization was revoked.

For a description of what types of expenses can be included in your deduction, click here. 

If you do qualify to take the business use of your home deduction prior to the 2018 tax year you can enter this under: 

1. Federal Section
2. Deductions
3. Enter Myself
4. Itemized Deductions
5. Less Common Deductions
6. Business Use of Home

Or if you are filing a Schedule C, Profit or Loss from a Business, you can enter this information under: 

1. Federal Section
2. Income
3. Enter Myself
4. Profit and Loss from a Business
5. Business Use of Home