Qualifying for the Home Office Tax Deduction
If you use any portion of your home exclusively for business purposes, you are entitled to claim the home office deduction for that space in your home. “Exclusively” does not mean that it must be the primary or sole location from which you work, just that the use of the space is exclusively for business.
Likewise, the requirement of exclusive use does not mean that certain activities are prohibited from taking place in your home office, any more than they would be prohibited in an office outside your home. Thus, if it had been your routine at one time for your children to come by after school and do homework in your office, it would be reasonable to expect that your children might do homework after school in your home office as well. But locations could be considered to be used exclusively for business.
Though a flag does arise for an audit if you are taking the home office deduction, the IRS has made it a lower priority for audits than in the past, in part due to the complexities of auditing a home office deduction.
By carefully calculating the amount of space that is used, and taking the deduction only of that percentage of the total square footage in the home, and properly maintaining the records for those deductions you take – typically for maintenance, repairs, insurance, utilities and depreciation or rent, you are likely to be able to avoid the risks associated with an audit. In essence, the only additional effort you need to make is the careful calculation of the space you use.
Typically, a home office deduction will run into the thousands of dollars. That is a highly valuable deduction. You will want to make the most of this deduction if you can.
Prepare your tax return with TurboTax Online to focus on deductions you may receive for mortgage interest paid, home office, donations, or education expenses. Self-employed individuals may opt for TurboTax Home and Business.