Can I Take a Deduction for Working From Home?

You can work out of your home and save on taxes at the same time. The home office deduction can be a bit tricky, so you need to know all the ins-and-outs. Below are some frequently asked questions that can help you get some answers.

• Can I deduct expenses for using my home for business?
• What are the requirements for the home office deduction?
• What expenses can I deduct?
• Can a percentage of my office be used in the definition of "exclusively?"
• Do I have to depreciate my home?
• I only worked part of the year from home. What can I deduct?
• Is my home office deductible? As a teacher, I work many hours there at night and week-ends.
• Can I claim the home office deduction for my investing activities?
• I do most of my work at my clients' homes or businesses. Can I still take a deduction?
• I have two businesses. Can I take the home office deduction twice?
• I entered all of the information for the home office deduction but it didn't lower my taxes. Why? 

Yes, if you meet certain requirements.

The cost of using your home for business can be used as an expense to reduce income if you operate you own business.

Also, if you are an employee of another company, you might be able to deduct home office expenses if you itemize. See the FAQ on Employee Business Expenses for more on this.

You must regularly use a portion of your home exclusively for conducting business.

Also, it must be your principal place of business. If you are an employee looking to take the home office deduction, you must also be using your home for the convenience of your employer, rather than for your own convenience.

You can deduct the entire amount of expenses that are related specifically to you business activity.

You can also deduct a portion of the expenses to maintain your home. 

You can use whatever portion of your home that meets the IRS exclusive requirement, even if the area is a small portion of a larger area.

No, but you might as well.

If you take the home office deduction, depreciation is allowed.

So, even if you don't use it, you will have been deemed to have taken it by the IRS. This comes into play when you sell your home and need to recapture the depreciation if you have a gain on the sale.

If you meet the office in home requirements for only part of the year, you can still take a portion of the expenses as a deduction.

For example, if you only worked half of the year from home, then you would take half of what you would take if you had do this for the entire year.

Probably not.

If you are a classroom teacher at a school with a building then you have a normal place of business that is not your home.

However, if you taught for an internet based school and had no other place of business, then you would be able to take a deduction if you meet the other requirements.

Probably not.

If you are classified as a trader and meet all of the requirements for the home office deduction, then probably yes.

If you are managing your investments rather than working as a trader, then this would not be classified as a business, and you would not meet the requirements of the home office deduction.

Probably.

Even thought you perform work at clients' homes (as a plumber or IT technician, for example), if you perform administrative tasks from your home and meet the other home-office requirements, then you would likely qualify.

Yes, if you meet all of the requirements for both businesses. If you have a separate space for each business then you will just do the home office process twice.

If you have two businesses that share the same office space, then you will need to split the space and expenses between the two companies.

Most of the expenses associated with the home office deduction cannot create or increase a loss for your business.

However, deductible mortgage interest, real estate taxes, and casualty losses can create or increase a business loss, while other expenses including rent, utilities, maintenance, and insurance cannot.

These disallowed losses can be carried over to the following year until they can be used.