If you're self-employed and file a Schedule C, you may be able to deduct certain expenses for the business use of your home. This deduction can help reduce your taxable business income when you use part of your home for qualifying business activities.
However, if you're a W-2 employee, you generally can't claim home office expenses as an itemized deduction on Schedule A. The deduction for unreimbursed employee business expenses was eliminated by the Tax Cuts and Jobs Act (TCJA) and remains unavailable under current law.
Who Can Claim the Home Office Deduction?
According to the IRS, you may qualify for the business use of home deduction if part of your home is used for one of the following purposes:
- Your principal place of business, used exclusively and regularly for your trade or business.
- A location where you regularly meet with clients, customers, or patients in the normal course of business.
- A separate structure not attached to your home that is used exclusively and regularly for business.
- Storage of inventory or product samples on a regular basis for a retail or wholesale business.
- Rental activities.
- A qualified daycare facility.
What Does “Regular and Exclusive Use” Mean?
To qualify for the deduction, the space must generally meet both of these requirements:
Regular Use
You must use the area on an ongoing basis for your business. Occasional or one-time business use isn't enough. For example, storing inventory once during the year wouldn't qualify.
Exclusive Use
The area must be used only for business purposes. If the space is also used for personal activities, it generally doesn't qualify for the home office deduction.
For example, a spare room used only as your office may qualify. A kitchen table used for both work and family meals generally does not.
What Expenses Can Be Deducted?
If you qualify, you may be able to deduct a portion of expenses related to your home, such as:
- Mortgage interest or rent
- Property taxes
- Utilities
- Homeowners insurance
- Repairs and maintenance
- Depreciation (for homeowners)
The amount you can deduct depends on the portion of your home used for business and the method you choose to calculate the deduction.