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ElectroFile Income Tax Service Newsletters
Income Tax Service
5200 W Market St
Greensboro, NC 27409
March 18, 2013
Six Tips about the Home Office Deduction
If you use your home for business, you may be able to deduct expenses
for the business use of your home. If you qualify you can claim the
deduction whether you rent or own your home. If you qualify for the
deduction you may use either the simplified method or the regular method
to claim your deduction.
Here are six tips that you should know about the
home office deduction.
Regular and Exclusive Use. As a
, you must use a part of your home regularly and exclusively for
business purposes. The part of your home used for business must also
Your principal place of business, or
A place where you meet clients or customers in the normal course of
A separate structure not attached to your home. Examples could
include a garage or a studio.
Simplified Option. If you use
simplified option, you multiply the allowable square footage of your office by a
rate of $5. The maximum footage allowed is 300 square feet. This option
will save you time because it simplifies how you figure and claim the
deduction. It will also make it easier for you to keep records. This
option does not change the criteria for who may claim a home office
Regular Method. If you use the
regular method, the home office deduction includes certain costs that you
paid for your home. For example, if you rent your home, part of the rent
you paid may qualify. If you own your home, part of the mortgage interest,
taxes and utilities you paid may qualify. The amount you can deduct
usually depends on the percentage of your home used for business.
Deduction Limit. If your gross
income from the business use of your home is less than your expenses, the
deduction for some expenses may be limited.
Self-Employed. If you are self-employed and choose the regular method, use
Form 8829, Expenses for Business Use of Your Home, to figure the amount you
can deduct. You can claim your deduction using either method on Schedule
C, Profit or Loss From Business. See the
Schedule C instructions for how to report your deduction.
Employees. If you are an employee, you must meet additional rules to claim the deduction. For
example, your business use must also be for the convenience of your
employer. If you qualify, you claim the deduction on
Schedule A, Itemized Deductions.
For more on this topic, see
Publication 587, Business Use of Your Home.