Business Use of The Home




DISCLAIMER: I am a CPA, but I am not your CPA. This article is for informational purposes only and is not tax or legal advice, nor can be relied upon as such. The author is not liable for any losses related to actions or failure to act related to the content of this article. If you need specific tax advice consult with a CPA who specializes in your subject matter and taxing jurisdiction.




I love working from home. It allows me to be available for my kids for after school activities and long conversations. I plan my work day around my kids’ schedules so I can be the most productive yet still accomplish things that are important to me as Work-at-Home Mom, such as putting a nutritious meal on the table each night.


Working from home, definitely has its perks; but one perk you may be missing out on is taking a tax deduction on your return for the business use of your home. In today’s episode we will dive into who the deduction is for, how to take it, and the information needed to file for the deduction.


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RESOURCES


Tests to Qualify for Business Use of Home Deduction:

o Exclusive Use Test – Defined area of the home is used specifically for business

Exceptions:

  • Daycare Centers

  • Supply Storage

o Regular Use Test – Must use area regularly for business purposes


o Trade or Business Test – Using your home in connection with a trade or business

Exceptions:

  • Some Rental Activities

o Principal Place of Business Test – No other fixed business location

Exceptions:

  • Separate Structure from Home

  • Meets with Clients, Patients, Etc. in the Home


Two Options for the Deduction:

o Simplified Deduction - $5 per square foot. Maximum space allowable is 300 square feet.


o Standard Deduction

LINKS

Publication 587: Business Use of Your Home


FREE PRINTABLE: Business Use of Home Tracking Sheet