If you’re self-employed and work from home, you may be eligible for the home office expense deduction, which can help lower your taxable income and maximize your savings. However, understanding the rules and choosing the right deduction method is key to ensuring compliance while getting the most out of this tax break.
To claim the home office deduction, your workspace must meet the following conditions:
✔ Exclusive & Regular Use – A portion of your home must be used exclusively and regularly for business. This means your office space cannot double as a guest room, dining area, or personal living space.
✔ Principal Place of Business – Your home office should be your primary place of business, or it must be used for meeting clients, customers, or conducting business-related activities regularly.
There are two ways to calculate your home office deduction—the Simplified Method and the Actual Expense Method. Here’s how they compare:
✔ Simplified Method
✔ Actual Expense Method
If you choose the Actual Expense Method, you can deduct a proportional share of the following expenses:
✔ Mortgage interest or rent – A percentage of your monthly payments can be deducted.
✔ Utilities – Electricity, water, internet, and other necessary services.
✔ Property taxes – The business-use portion of your annual property taxes.
✔ Home insurance – A portion of your homeowner’s or renter’s insurance.
✔ Depreciation – If you own your home, you can depreciate the business-use portion.
✔ Maintenance & repairs – Only expenses related to the business portion of your home (e.g., fixing a broken office window).
Choosing the right deduction method can make a big difference in your tax savings. At Dynamic Tax & Accounting, we help self-employed individuals navigate home office deductions, ensuring they maximize their savings while staying IRS-compliant.
Need assistance with your tax strategy? Schedule a consultation with us today and take control of your tax savings!
