Taxes 2023: Do You Qualify for a Home Office Deduction?
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.
See: Here’s How Much Americans Have in Their Savings Accounts in 2023
Read: 3 Ways Smart People Save Money When Filing Their Taxes
Find: Do You Have a Tax Question? Ask a Tax Pro
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.
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.
Take Our Poll: How Much of a Tax Refund Do You Expect in 2023?
Teens & Taxes: Does Your Teen Need To File Taxes for Their Part-time Job?
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.”
More From GOBankingRates
- Keep an Eye Out for Rare Dime Worth as Much as $2,000 -- How To Spot It
- What Is the State of Women & Money in 2023?
- Build Your Credit Score with These Simple Strategies
- Experts: 4 Safest Places To Keep Your Savings