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Home Office Deduction Rules for Self-Employed Taxpayers and Independent Contractors

Qualifying for a Deduction

There are two basic requirements to qualify for the deduction.

  • The taxpayer needs to use a portion of the home exclusively for conducting business on a regular basis.

  • The home must be the taxpayer’s principal place of business.

Specifically, a taxpayer must use part of their home for one of the following:

  • Exclusively and regularly as a principal place of business for a trade or business

  • Exclusively and regularly as a place where patients, clients or customers are met in the normal course of a trade or business

  • As a separate structure that is not attached to a home, that is used exclusively and regularly in connection with a trade or business

  • On a regular basis for storage of inventory or product samples used in a trade or business of selling products at retail or wholesale

  • For rental use

  • As a daycare facility

The term "home" for purposes of this deduction:

  • Includes a house, apartment, condominium, mobile home, boat or similar property

  • Includes structures on the property, like an unattached garage, studio, barn or greenhouse

  • Doesn’t include any part of the taxpayer’s property used exclusively as a hotel, motel, inn or similar business

Qualified Expenses

Deductible expenses for business use of home normally include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs.

A taxpayer may not deduct expenses for the parts of their home not used for business; for example, expenses for lawn care or painting a room not used for business.

To read the full IRS article, Click Here

To learn how to Claim the deduction, Click Here

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