If you claimed your home office as a miscellaneous deduction on your individual income tax return, the Tax Cuts and Jobs Act, also known as tax reform, has eliminated that deduction for tax years 2018-2025. If you claim your home office as a business write-off on a Schedule C, your deduction was not affected by tax reform.
What are the requirements to claim my home office?
The IRS has criteria to help you determine if your space qualifies for the home office deduction. First, you must be able to show that your residence is where you run most of your operations. Second, your designated home office space for must be used for conducting business only.
For tax years 2013 to 2017, a person working outside the home for an employer could claim the home office deduction on a Schedule A under miscellaneous itemized deductions. With tax reform, you can only claim this credit if you’re self-employed and file a Schedule C.
How much can I claim for my home office deduction?
There are two ways to calculate your home office deduction.
1) The simplified method says you can deduct $5 per square foot used for business, up to 300 square ft. There are additional rules regarding depreciation and carryover losses. You can read more about those on the IRS website here.
2) The regular method for calculating your home office deduction requires you to keep track your household expenses (mortgage, utilities, repairs, insurance, etc). The amount you can write off, then, is based on the percentage of your home designated for business use.
You may choose to use either the simplified method or the regular method for any taxable year, but once you have chosen a method, you can’t switch during the same year.
Which tax form do I use to claim my home office deduction?
As previously mentioned, you must file a Schedule C on Form 1040 to be eligible for the home office deduction. You’ll also need to fill out a Form 8829 Expenses for Business Use of Your Home. When you e-file with TaxSlayer, you’ll be guided through the entire process. The software will ask you questions about your space and expenses and then fill your information in the appropriate fields.
Can I take the home office deduction in addition to SALT?
If you own your own home and are self-employed, you can claim both the deduction and the State and Local Tax Deduction. Read more about the restrictions to the SALT deduction under the Tax Cuts and Jobs Act here.
This article is up to date and accounts for tax law changes for tax year 2018 (tax returns filed in 2019). Learn more about tax reform enacted under the Tax Cuts and Jobs Act here.