The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the miscellaneous deduction for home office expenses for tax years 2018-2025. However, if you’re self-employed, you can still claim the home office deduction on Schedule C if your home office meets certain requirements.
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 your primary place of business. In other words, it must be a place where you meet with patients, clients, or customers. Second, your home office must be used for conducting business only.
Prior to tax reform, a person working at 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. The maximum square footage you can take the deduction for is 300 square feet. 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 deduct 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 file your taxes with TaxSlayer, you’ll be guided through the entire process.
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 (SALT) Deduction. Read more about the changes to the SALT deduction under the TCJA here.
This article is up to date and accounts for tax law changes for tax year 2019 (tax returns filed in 2020). Learn more about tax reform enacted under the Tax Cuts and Jobs Act here.