Working From Home: Taxes in the Home Office

If you often or exclusively work from home, you have likely carved out a productive space for your work. Although there are some specific criteria you have to satisfy, you may be able to write off some of your operating expenses for that home office.

Here are a few things you should know:

Size doesn’t matter

There’s no size requirement. Your designated space can literally be a desk, or it can be an entire portion of your home. So long as the space is distinct, identifiable, and used exclusively for business.

Exclusive doesn’t mean completely exclusive

If you frequently work from the dining room table, or the couch from which you normally watch TV, you cannot claim that space for the deduction. The space you claim must be specifically used for business purposes.

Business storage and daycares have a different set of criteria

If you operate a daycare or use your home to store goods for your business, you can ignore the previous point. Storage space has to be used only for product that you intend to sell, and your home has to be the only “fixed location” of your business. So if you’re just storing some extra business equipment or stock, your home space doesn’t qualify.

Employees can also deduct home office expenses

You can only qualify for this deduction if the office exists for your employer’s convenience. An office remodel or lack of space at the usual office location would apply in this instance. However, if you’re renting out the space to your employer, you cannot claim the deduction.

If you work in multiple locations you can still claim the deduction

You can only claim the home office deduction if your home is where you do the majority of your work, or your home office is where you perform specific tasks that are a necessary function of your job. If you use a part of your home exclusively and regularly to meet with clients, customers, or patients, it does qualify for the deduction

Even if it is not your primary place of business, you can still claim the deduction. However, just because you take the occasional phone call or meeting in the space does not mean it qualifies; you have to be conducting regular in-person meetings. There’s also a partial deduction in the event that you only meet the criteria for part of the year.

Image credit: Sean MacEntee