What to know about the Home Office Deduction : GKM Inc – Blog

What to know about the Home Office Deduction

Posted by:   |  Jun 21, 2016  | Post comments

You must generally use part of your home regularly and exclusively for business to claim the deduction. The IRS has a few tests that must be met before you can claim a tax deduction for using part of your home for business purposes.
Calculating the deduction can be as easy as multiplying the square footage of your workspace by $5. This simplified method of calculating the home office deduction was introduced a few years ago to make it easier for home-based businesses to claim the deduction. The maximum footage allowed for this calculation is 300 square feet, so the most you can deduct using the simplified method is $1,500.
Calculating the deduction based on your actual expenses may result in a larger deduction. You still have the option to calculate the deduction using the regular method, which involves tracking certain home expenses, such as mortgage interest, real estate taxes, rent, insurance, utilities, and repairs, and allocating them between business & personal use. It is easier than it sounds, particularly if your tax advisor prepares your tax returns for you.