During this pandemic many of us have been forced to work from home. The good news is that self-employed individuals may be able to claim this office as a deduction for some extra savings on their taxes. It most likely will not apply to most remote employees during the pandemic, but it should be taken into consideration for those self-employed and who work from home or have changed their business model to work from home due to covid-19 safety obligations.
Deducting your home office is not as daunting as it sounds and will not automatically trigger an audit.
It is important to properly identify the qualified office space to claim this deductible. So, let us talk about the qualifications of a home office.
What is a home office?
A home office does not have to be a spare room, it can be your garage, the shed in your backyard, a barn, or any free-standing structure on your property. It is even ok to have it be a location in your kitchen or dining room, if it meets the IRS definition of “home office,” you can deduct it on your home office.
The office space must meet two main requirements. These are:
- You use the office regularly and exclusively for your business.
- The home office is the “principal place” of your business.
In the case of using a corner of the kitchen, you can claim this area as your home office if you can show that you exclusively use that space for only your business. Consider adding a curtain that closes your “office” off from the rest of the kitchen to show that the area is used exclusively for your office.
Regarding the principal place of your business, if you conduct business at a location outside your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction.
Additionally, homeowners are not the only people who can claim the home office deduction. Renters are also eligible to claim the deduction if their home office meets IRS guidelines.
Taxes are complicated. So, before you file, it is always best to consult with a qualified tax professional.