Can I Claim My Home Office?

Home Office Tax Deduction?

What is the Home Office Deduction?

The home office deduction allows eligible business owners to deduct a portion of their household expenses that are directly related to business use of their home. This can reduce taxable income and, ultimately, the amount of tax owed.

A qualifying “home office” can be an entire room, a defined section of a room, or even a converted space—so long as it is used exclusively and regularly for business purposes. Currently, this deduction is only available to business owners, as the 2017 Tax Cuts and Jobs Act (commonly called the “Trump Tax Reform”) suspended this benefit for W-2 employees until at least 2025.

Who is Eligible to Claim This Deduction?

• Sole Proprietors and Single-Member LLCs

  
  

  Calculate the deduction using IRS Form 8829 and report it on Schedule C.

• Partners in Partnerships or Multi-Member LLCs

  
  

  Claim the deduction as an unreimbursed partner expense.

• Corporation Owners (C Corporations and S Corporations)

  
  

  Since shareholders are considered employees, the corporation should reimburse you for business use of home expenses rather than claiming the deduction directly.

How is the Deduction Calculated?

Simplified Method

• Deduct $5 per square foot of home office space, up to a maximum of 300 square feet.

• Example: A 120-square-foot office × $5 = $600 deduction.

Actual Expense Method

1. Measure the square footage of your office and your entire home.

2. Divide office space by total home space to calculate the percentage used for business.

   
   

   • Example: A 120-square-foot office in a 1,200-square-foot home = 10% business use.

3. 
   

4. Add together home expenses such as rent, mortgage interest, utilities, internet, property taxes, and insurance.

5. Multiply the total by the business-use percentage.

   
   

   • Example: If monthly expenses are $2,800 × 10% = $280 per month (or $3,360 annually).

   
   

Note: If you own your home, depreciation (but not mortgage principal) also factors into the calculation. Form 8829 should be used to determine this.

Special Situations

Home Additions or Renovations

Adding finished square footage to your home (e.g., finishing a basement or adding a room) changes the percentage calculation because it increases the denominator (total home square footage). This may lower the deduction unless the addition is used exclusively for business—in which case both numerator and denominator increase, possibly raising your deduction.

Unfinished or Detached Spaces

Garages, sheds, or separate structures used for business may qualify as part of your home office. Include their square footage when calculating the total business-use percentage of your property.

Need Professional Guidance?

Determining the proper home office deduction can be complex, especially if you own your home or use multiple spaces for business. Our team can help ensure accuracy and maximize your deductions.

Contact us at McClintockTaxCPA.com or katie@mcclintocktaxcpa.com to schedule a complimentary consultation with one of our advisors.