Specialty Bookkeepers and Tax Salt Lake City Utah

Are You Qualified to Claim a Home Office Deduction?

How do you determine if you’re eligible to claim a home office deduction? If you’re self-employed and use part of your home exclusively for business use, you may qualify for the IRS Home Office Tax Deduction for 2022.

You must meet these requirements to qualify:

  1. Regular and exclusive use: You must regularly use a room or area at your residence, which includes separate free-standing structures on your property, such as an unattached garage, barn, shed, or studio (not including any part of your residence used exclusively as a rental stay, hotel, motel, or similar business).
  2. Principal place of business: You must either regularly meet with clients or customers at your residence, or your home office must be the primary location for your business. There are exceptions, such as storage and daycare businesses. Your home office does not have to be the only place you meet with clients or conduct business, and a separate structure that is not your principal place of business but is used exclusively for your business will qualify for the deduction.

There are two methods to choose from when calculating your home office expense deduction. Since 2013, the home office deduction may be calculated using the simplified method or regular method.

  1. Simplified: Calculated at the rate of $5/ft² with a maximum of 300 ft², and a maximum deduction of $1,500. Schedule A with allowable home-related itemized deductions claimed in full, such as mortgage interest and real estate taxes. For the years the simplified option is used, a home depreciation deduction or later recapture of depreciation may not be claimed.
  2. Regular: Deductions are based on the percentage of the home devoted solely to business use; direct expenses are deducted in full. Determine actual expenses and maintain records to claim using this method. Depreciation of the home will be deducted based on the percentage used for business.

Have questions about this deduction or other tax concerns? SBK can help! Visit our tax services page for an Early Bird discount and to learn more about how we can make tax time less stressful.

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