The home office rules focus on how a defined part of the home is used. A self-employed person may qualify when a space is used regularly and exclusively for a qualifying business purpose, subject to exceptions and other requirements. Employees generally cannot claim the federal home office deduction for ordinary unreimbursed work-from-home expenses.
Test the business use first
Publication 587 describes qualifying uses, including a principal place of business, a place for meeting clients in the normal course of business, or a separate structure used in the trade. A room used for both family activities and business usually fails the exclusive-use test. Special rules can apply to inventory storage and daycare.
Choose a calculation method with records
The simplified method uses eligible square footage and an IRS rate; the regular method allocates actual home expenses such as utilities, insurance, and eligible repairs. Each method has limits and record requirements. Do not assume the method with the larger preliminary number is always the right one; depreciation and later sale consequences may matter under the regular method.
Create a defensible file
Review the facts if your business moves, your work pattern changes, or the room begins serving a personal purpose.
- Record the work area’s measurements and total home area.
- Keep a dated description of how the space is used.
- Retain bills, rent or mortgage records, property taxes, and repair invoices when relevant.
- Separate direct office repairs from household-wide costs.
Read more from the IRS
This article provides general educational information, not advice for a particular tax, accounting, legal, or investment situation. Rules and forms can change; review your facts with a qualified professional.