In recent years the trend for working from home has increased significantly. The reasons for this are various, but it is beneficial for both employers and employees.

However, for those working from home, this new convenience has also brought some inconveniences. Like now they have to bear the burden of extra expenses that were earlier on the employers.

Thus this question emerges in the mind whether working from home is beneficial. If you are also brainstorming with the same problem, you are on the right page. Here you will learn about the home office tax deduction and how to qualify.

What Is The Eligibility

Before reaching any other point it will be good for us to glimpse the introduction of home tax deduction.

If you work for your small or large business from your home, you can claim tax benefits. Here it is a home office tax deduction.

Exclusive Use With Regular Timings

If you are using a part or a room of your house for business usage regularly. Your home can include an apartment, house, or mobile home or condominium.

Your home office has to be a primary place for your business where you are doing regular work. With that, if you are also meeting your clients and customers then you are eligible.

Now, you can't claim a home office tax deduction if you generally use any space of your home for work casually. There are exclusive and regular use definitions for your home office work that you need to satisfy.

Other Eligibilities

In this tax deduction, any use of the property for a motel, inn, hotel, or other similar businesses is prohibited. However, daycare and storage facilities are allowed.

For instance, if you are running a child daycare for certain hours of the day, like 9 to 6 for all days in weeks. And after you use that space for personal use then also you can avail yourself of this tax deduction. Storage facility business is also the same.

If you have a daycare center in a portion of your home, where you use the space for a certain time of the day for daycare purposes and rest for personal uses,, you can also claim home office tax deductions.

This tax benefit is not for working-from-home employees. Therefore if you are working remotely for your office, you can't claim this tax deduction. However, some states allow home office tax deductions for office employees.

If you are a full-time employee and with that also a part–time worker or freelancing work then you can claim this tax deduction.

Even if you are a full–time freelancer worker then, also you can use a home office tax deduction. Therefore if you are a small business owner, freelancer worker, part–time worker, or have a similar home business then you can get this tax benefit.

How to Calculate Deductions

After checking eligibility for home office tax deductions, the next step you need to do is to calculate deductions.

Firstly you can make calculations on a percentage basis. In this method, you need to calculate how much percentage of your home you use for your business.

For example, using 30% of your home for your business. Then you can divide the entire expense for your home into 30% and claim the home office tax deduction.

Secondly, you can use the square foot method. This calculation method will give you a prescribed amount for the allowed square foot.

This method was introduced by the IRS in 2013 and allowed $5 per square foot of your house to be used for your business work. The maximum limit is 300 square feet for which you can avail of the deductions.

There is an exception too for daycare facilities. If you are running a daycare center then your calculation for tax deduction will become different.

In this case, you will be using your daycare center for personal use for part of the time. Therefore you need to calculate the time you run a daycare center in a year in hours including its cleaning and maintenance timings.

Then you need to compare these working hours with the total hours of the year. As a result, you will get a percentage of hours for which you use your personal space for the daycare facility. Now you can claim home office tax deductions on this percentage method.

However, your eligibility and method for calculation are revised every year. So your tax deductions can change from year to year.

How to Claim Home Office Tax Deductions

Now it's time to discuss how to apply for home office tax deductions after completing all the calculations. Here you need to keep in mind one thing, and that is you can also claim for the supplies that you use for your home office.

You can deduct expenses for your laptops, desktops, smartphones or cellphones, printers, and other kinds of office supplies. To claim these expenses, you need a bill receipt for all these items.

Also if you are using these items for your personal use then you need to claim for the proportion used only for business.

You need to consider that your deductible amount can’t be more than your income.

You can apply for this tax deduction in offline and online modes. In addition to this, you can also use any other party that can file taxes on your behalf. If you want to file your tax deduction on your own then you can visit the official website.

There you will get information on the required procedure and required documents. With their help, you can complete the procedure in just some minutes.

FAQs

1. What things can we claim for home office tax deduction?

These expenses include insurance premiums, utilities, depreciation, repairs, and if there is then mortgage interest too.

2. Do other workspaces without homes qualify for a home office tax deduction?

Apart from home or house space, there are many other spaces too that you can use for home office purposes. These spaces include a studio, greenhouse, or unattached garage.

3. Is it profitable to have a home office?

Yes, it is beneficial to have a home office in many ways. By working from home you can save money and time on numerous things like commute timing, tolls, and even on food.

With the home office tax deductions, you can even claim the expenses that occur in the home office. Therefore the home office is good if everything is utilized properly and claims the right tax deductions.

Conclusion

Working from home is convenient and beneficial as it saves your time and money. However, there are also expenses that you will have from your home office.

These expenses can hinder your growth and even blow your income. To save you from such conditions, the IRS offers you a home office tax deduction. By using this tax benefit, you can make your home office truly beneficial for you.