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TOP IRS TIPS TO KNOW ABOUT THE HOME OFFICE DEDUCTION

IRS Tax Tip 2017-41

Taxpayers who use their home for business may be able to deduct expenses for the business use of it. Qualified persons can claim the deduction whether they rent or own their home. Use the simplified method or the regular method to claim a deduction.

Here are six tips to keep in mind about the home office deduction:

1. Regular and Exclusive Use. Generally, taxpayers must use a part of their home regularly and exclusively for business purposes. The part of a home used for business must also be:

  • A principal place of business, or
  • A place where taxpayers meet clients or customers in the normal course of business, or
  • A separate structure not attached to the home. Examples could include a garage or a studio.

2. Simplified Option. To use the simplified option, multiply the allowable square footage of the office by a rate of $5. The maximum footage allowed is 300 square feet. This option will save time because it simplifies how to figure and claim the deduction. It will also make it easier to keep records. The rules for claiming a home office deduction remain the same.


3. Regular Method. This method includes certain costs paid for a home. For example, part of the rent for rented homes may qualify. For homeowners, part of the mortgage interest, taxes and utilities paid may qualify. The amount deducted usually depends on the percentage of the home used for business.


4. Deduction Limit. If the gross income from the business use of a home is less than expenses, the deduction for some expenses may be limited.


5. Self-Employed. Taxpayers who are self-employed and choose the regular method should use Form 8829, Expenses for Business Use of Your Home, to figure the amount to deduct. Claim the deduction using either method on Schedule C, Profit or Loss from Business. See the Schedule C instructions for how to report the deduction.


6. Employees. Employees must meet additional rules to claim the deduction. For example, business use must also be for the convenience of the employer. If qualified, claim the deduction on Schedule A, Itemized Deductions.

For more on this topic, see Publication 587, Business Use of Your Home. View, download and print IRS tax forms and publications on IRS.gov/forms anytime.


All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.  

Additional IRS Resources:

  • FAQs - Simplified Method for Home Office Deduction

IRS YouTube Videos:

  • Home Office Deduction for Daycare Providers (Simplified Method) – English
  • Home Office Deduction for Schedule C Filers (Simplified Method) – English
  • Home Office Deduction for Schedule F, Employee, Partnership Filers (Simplified Method) – English

IRS: Home Office Deduction Often Overlooked by Small Business Owners

Here are some good review points which you may wish to share with your clients.

From the IRS Newswire

IR-2017-96, May 5, 2017 WASHINGTON — 

The Internal Revenue Service today reminded small business owners who work from a home office that there are two options for claiming the Home Office Deduction. The Home Office Deduction is often overlooked by small business owners. 

As part of National Small Business Week (April 30-May 6), the IRS is highlighting a series of tips and resources available for small business owners. 

Regular Method

The first option for calculating the Home Office Deduction is the Regular Method. This method requires computing the business use of the home by dividing the expenses of operating the home between personal and business use. Direct business expenses are fully deductible and the percentage of the home floor space used for business is assignable to indirect total expenses. Self-employed taxpayers file Form 1040, Schedule CProfit or Loss From Business (Sole Proprietorship), and compute this deduction on Form 8829Expenses for Business Use of Your Home. 

Simplified Method 

The second option, the Simplified Method, reduces the paperwork and record-keeping burden for small businesses. The simplified method has a prescribed rate of $5 a square foot for business use of the home. There is a maximum allowable deduction available based on up to 300 square feet. Choosing this option requires taxpayers to complete a short worksheet in the tax instructions and entering the result on the tax return. There is a special calculation for daycare providers. Self-employed individuals claim the home office deduction on Form 1040, Schedule C , Line 30; farmers claim it on Schedule F, Line 32 and eligible employees claim it on Schedule A, Line 21. 

Regardless of the method used to compute the deduction, business expenses in excess of the gross income limitation are not deductible. Deductible expenses for business use of a home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance and repairs. In general, expenses for the parts of the home not used for business are not deductible. 

Deductions for business storage are deductible when the dwelling unit is the sole fixed location of the business or for regular use of a residence for the provision of daycare services; exclusive use isn't required in these cases.

Thinking About Property Taxes


Last December, Glen Hegar, the Texas Comptroller of Public Accounts published a document titled, "Property Taxpayer Remedies". They discussed:

  • How to Protest Property Value
  • What Can Be Protested
  • How to Complete the Form
  • How to Resolve Concerns Informally
  • What is an ARB
  • When are Protests Filed
  • and where to get information on additional related items.
The document was mailed to many taxpayers, but it may be something that you want to review with your clients.

Download Property Taxpayer Remedies

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