The COVID-19 pandemic has caused massive societal shifts in the past two years, and one of the most significant changes is how and where people work. Some people who work from home can take a tax deduction for their home office expenses. Learn more about this process and whether you qualify.

Are You Eligible to Write Off Your Home Office?

If you are self-employed and have a dedicated office space, you can write off various costs related to doing business from your home. However, if you are an employee, your home office expenses are not tax-deductible – even if your employer closed their physical workspace and shifted to a fully remote working schedule.

People who dabble in freelancing part-time, or who were only briefly self-employed before finding a job with an employer, can still deduct home office expenses from their taxes if they have some Schedule C income to report.

To qualify for the home office deduction, you must regularly use part of your home exclusively for your work. The IRS doesn’t require this space to be a separate room, but it must be in an area of your house where you don’t do any other activities. For example, you can carve out a workspace in an unused corner of your garage, but you can’t claim your “office” as the dining room table where everyone in your family eats their meals.

How to Calculate Your Home Office Deduction

Self-employed people have two options for writing off their home office spaces.

Standard

With this approach, you’ll need to figure out how much of your home’s total square footage your office takes up. For instance, if your workspace represents one-tenth of your house’s square footage, you can deduct 10% of your mortgage, insurance and utilities. You can also write off part of your property taxes and depreciation on the home.

While the standard option requires more complex calculations, a qualified tax expert who stays abreast of all IRS changes can help you figure out whether it’s worth the effort to get you a larger refund.

Simplified

The IRS established a straightforward alternative for deducting home office expenses in 2013. Instead of adding up all your expenses, you can write off $5 per square foot of your home office, up to 300 square feet, for a maximum deduction of $1,500.

Are Any Other Home Office Expenses Tax-Deductible?

Self-employed people – even those who only do a bit of freelance work on the side – can also deduct other costs related to setting up or maintaining their home workspaces, including the following.

• Furniture, like a desk, chair, bookshelf or filing cabinet
• Lighting
• Equipment such as a printer, router or laptop
• A dedicated phone or internet connection for your business

Expert Tax Management for Self-Employed People

You went into business for yourself because you wanted more flexibility, freedom and time to pursue your passion – but doing taxes when you’re self-employed can be complicated. At Clear View Business Solutions, we keep our fingers on the pulse of tax law so you don’t have to. Let us help you maximize your deductions and credits and minimize your tax liability. We provide full-service accounting and bookkeeping for solopreneurs, freelancers and small business owners at our two Tucson locations.