Tax Tip Tuesday: Increase Your Home Office Deductions for 2019 taxes


“I work from home. Are there any deductions I can take for my home office?”

Yes, but when it comes to claiming the home office deduction, the IRS has strict rules to dictate who qualifies. To get the most out of your home office deduction and avoid an audit, let’s review a few ground rules: 

Exclusive and Regular Use 

In order to be eligible for the deduction, the space you are claiming must only be used for business. Meaning, you can’t have a general home office that you sometimes use for work and sometimes use for a guest room, eating area (aka dining room table), workout room, arts and crafts area, etc. The only purpose of this space is your business.  

While the IRS can be strict on this eligibility requirement, they use a common rule of thumb: if personal activities occur in your home office about as often as in a regular office, you’ll generally meet the requirement. So, if you take a couple of personal phone calls, you’re fine. 

There is no set rule for how often you must use the space, but if you use your home office for a few hours a day you will generally meet the regularity requirement. If you’re rarely in the space each week, you probably won’t qualify. 

There are two exceptions to the exclusivity rule: 

  1. If you run a daycare out of your home, you potentially use your home regularly for childcare from 8 a.m. to 5 p.m. every day and then end up using the space for personal activities after your daycare closes at 5 p.m. 
  2. If you dedicate a portion of your home to inventory or business products. 

Principal Place of Business 

Your home office doesn’t have to be the only place you do business, but it does have to be the primary place you do business. This could mean that you regularly meet clients and customers here, or you perform administrative tasks — such as billing and bookkeeping. 

How to claim the home office deduction 

There are two ways to calculate the home office deduction: 

  1. The simplified square foot calculation 
  2. The actual expense deduction 

The Simplified Method 

All you have to do here is multiply the square footage of your home office by $5. 

The catch with this method is that the maximum you can deduct is $1,500. If you’re just starting out, this may be the right choice for you. 

The Regular Method Using Form 8829 

If your home office expenses exceed the $5/square foot calculation, you’ll want to use the regular method using Form 8829. To apply this method, calculate the percentages of the expenses you want to claim. 

For this process, expenses are considered either direct or indirect.

Direct expenses are those that are clearly and definitively tied to your office space. For example, if you’ve had the walls painted or renovations done exclusively for your home office, it would qualify. You can claim 100% of direct expenses. 

Indirect expenses are costs related to the property that houses your home office. This includes things like mortgage and rent or utilities. You may only claim a percentage of indirect expenses; the total square footage of your home divided by the square footage of your office. 

The limit to the regular method is that you can’t claim more than you earn while working in your home office. Any deduction that exceeds the income for the business related to the home office will be carried to the next year. 

“Which method should I use — simplified or regular?”

A few factors to take into consideration include: 

The Size of your home office. If your home office is 300 square feet or less, the simplified method is typically better. If you have a bigger office, the regular method tends to get you a larger deduction. There’s no limit to the size of a home office using Form 8829. 

Mortgage and rental rates if you live in an area where the cost of living is traditionally high, you will probably get a larger deduction using the regular method. 

Recordkeeping. The regular method requires you to keep detailed records of everything related to your home office. If you prefer to go the easier route, the simplified method may be for you.  

If you’re still unsure which method to choose — OR would just like someone to take care of it all for you — set up a consultation with Verdant today. Your first meeting is always FREE and our licensed CPAs can help clear up your questions and concerns. 

Home Office Deductions
Click to save me to your pins!

Photography by Bench Accounting

Close Menu


No Rendering of Advice
The information contained within this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Presentation of the information via the Internet is not intended to create, and receipt does not constitute, an accountant-client relationship. Internet subscribers, users and online readers are advised not to act upon this information without seeking the service of a professional accountant.

Any U.S. federal tax advice contained in this website is not intended to be used for the purpose of avoiding penalties under U.S. federal tax law.

Accuracy of Information
While we use reasonable efforts to furnish accurate and up-to-date information, we do not warrant that any information contained in or made available through this website is accurate, complete, reliable, current or error-free. We assume no liability or responsibility for any errors or omissions in the content of this website or such If you wish to contact the webmaster of this website, please call CPA Websites Solutions at 802-655-1519.

Disclaimer of Warranties and Limitations of Liability
This website is provided on an “as is” and “as available” basis. Use of this website is at your own risk. We and our suppliers disclaim all warranties. Neither we nor our suppliers shall be liable for any damages of any kind with the use of this website.

Links To Third Party Websites
For your convenience, this website may contain hyperlinks to websites and servers maintained by third parties. We do not control, evaluate, endorse or guarantee content found in those sites. We do not assume any responsibility or liability for the actions, products, services and content of these sites or the parties that operate them. Your use of such sites is entirely at your own risk.

Privacy Policy

Here is our Privacy Policy required by the Gramm-Leach-Bliley Act of 1999.

We collect nonpublic personal information about you from the following sources:

  • Information we receive from you on applications, tax organizers, worksheets and other documents;

  • Information about your transactions with us, our affiliates, or others;

  • Information we receive from a consumer-reporting agency.

We do not disclose any nonpublic personal information about our clients or former clients to anyone, except as permitted by law.

We restrict access to nonpublic personal information about you to those members of our firm who need to know that information to provide services to you. We maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information.

Online information is stored on secure servers located in CPA Website Solutions SOC 1 certified data centers.

If you have any questions about this policy, please do not hesitate to contact us.