Taxes 2023: Do You Qualify for a Home Office Deduction?

Happy African American mother using laptop and working on paperwork while her daughter is embracing her at home.
Drazen Zigic / Getty Images/iStockphoto

With the prevalence of remote work, working from home is a way of life for many Americans. As such, whether you can qualify for a home office deduction when you do your taxes remains a popular question.

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First off, the home office deduction is available to self-employed taxpayers, independent contractors and those working in the gig economy, according to the Internal Revenue Service (IRS).

Then, to qualify you must use part of your home “exclusively and regularly as a principal place of business for a trade or business.”

TurboTax says that this is the biggest barrier to qualify.

“The law is clear and the IRS is serious about the exclusive-use requirement. Say you set aside a room in your home for a full-time business and you work in it 10 hours a day, seven days a week. If you let your children use the office to do their homework, you violate the exclusive-use requirement and forfeit the chance for home office deductions,” according to TurboTax.

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There are two ways to claim the deduction. The first is the so-called simplified way, which enables you to deduct $5 per square foot of your home office, with a 300 square foot cap — for a $1,500 maximum deduction.

Or, you can use the regular version of the deduction, which is more complicated as “it uses the percentage of your home used for business, including actual expenses, such as part of your mortgage interest, insurance, utilities, repairs and depreciation,” according to CNBC.

“The simplified method is my favorite way because most people don’t have the records or enough deductions to make the regular method work,” Rob Burnette, CEO of the Outlook Financial Center, told CNBC.

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Whatever option you choose, if you’re eligible, be aware, as Turbotax indicated, that “since home office tax deductions are so easily abused, the Internal Revenue Service (IRS) tends to scrutinize them more closely than other parts of your tax return.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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