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Who Can Claim a Home Office Tax Deduction?

It is possible to claim a tax deduction for maintaining and using a home office, but the IRS has strict guidelines about who can take this deduction and under what circumstances. Read on to find out more!

Why Claim a Home Office Deduction?

It costs money to secure and maintain a home office. You have to pay for the space, either by buying or renting your home, and you have to pay for all associated utilities, insurance, and repairs as well.

This is why many small business owners, self employed individuals, and even employees find it useful to keep track of and deduct the cost of maintaining a home office. When you incur expenses while conducting business in a specific location within your home, it makes sense to count those as business expenses. 

Who Qualifies to Claim a Home Office Deduction?

You don't necessarily have to be self-employed to deduct home office expenses. You can work for yourself or be an employee of a company. The nature of your employment isn't of primary importance in this case. 

What is important is how and when you use your home office. The IRS considers two major areas when it comes to determining if a particular space is truly a home office. These are know as the "regular and exclusive use" criteria. 

Understanding "Regular and Exclusive Use"

In order for a particular space in your home to count as an IRS-recognized home office, you must use it regularly. It should either be your primary business location, or a dedicated location that you use on a consistent basis for business purposes.

Along with regular use, your home office space must be used exclusively for business. In other words, a spare room that you sometimes work in is not a home office. However, a closet that you convert into an office space and use only for work is a home office. 

Special Considerations for Employees

If you are employed by a company but use a home office, you must also satisfy additional criteria before you can deduct home office expenses. First, you must establish that you use your home office for the convenience of your employer. If working from home is merely simple or useful (for you or for your employer), you won't qualify for a home office deduction. Second, you must also establish that you do not rent part of your home to your employer and perform work duties in the rented portion. 

To find out more about taking a home office deduction, contact the team at Taxation Solutions, Inc. today! We are here to help individuals and businesses in Indianapolis and the surrounding area with tax queries large and small.