By Matthew Wheeler via Iris.xyz
Self-employed taxpayers who use their home for business may be able to deduct expenses for the business use of it. Qualified persons can claim the deduction whether they rent or own their home and can use the simplified option or the regular method to claim a deduction.
For tax years prior to 2018, employees could also claim home office expenses as deductions provided they met additional rules such as business use must also be for the convenience of the employer (not just the employee). Tax reform legislation passed in 2017 however, repealed certain itemized deductions on Schedule A, Itemized Deductions for tax years 2018 through 2025, including employee business expense deductions related to home office use, affecting many remote employees.
As a reminder, here are five tips to keep in mind about the home office deduction:
1. Regular and Exclusive Use. Generally, taxpayers must use a part of their home regularly and exclusively for business purposes. The part of a home used for business must also be:
- A principal place of business, or
- A place where taxpayers meet clients or customers in the normal course of business, or
- A separate structure not attached to the home. Examples could include a garage or a studio.
2. Simplified Option. To use the simplified option, multiply the allowable square footage of the office by a rate of $5. The maximum footage allowed is 300 square feet. This option will save time because it simplifies how to figure and claim the deduction. It will also make it easier to keep records. The rules for claiming a home office deduction remain the same.
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