Home Office Tax Deduction: Who Qualifies and How to Claim It
Written by
Ana Gotter
Edited by
Joe Evans
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
If you work from home, the home office tax deduction can lower your tax bill — but only if you qualify. The key rule is simple: self-employed workers usually qualify, W-2 employees generally don’t.
Understanding who can claim this deduction — and how to do it correctly — helps you avoid costly mistakes and claim every deduction you’re entitled to under current IRS rules.
At a Glance
Item Details Deduction Home Office Tax Deduction Who Qualifies Self-employed individuals, independent contractors, sole proprietors Who Doesn’t Most W-2 employees (2018-2025) Methods Simplified Method or Actual Expense Method Max Simplified Deduction $1,500 per year Main Risk Failing exclusive-use or regular-use tests
What Is the Home Office Tax Deduction?
The home office tax deduction allows qualifying taxpayers to deduct expenses related to the portion of their home used exclusively and regularly for business.
Depending on the method you use, deductible expenses may include a percentage of:
- Rent or mortgage interest
- Utilities (electricity, gas, water)
- Homeowners or renters insurance
- Repairs and maintenance
- Depreciation (for homeowners)
The purpose of this deduction is to recognize that self-employed individuals often use part of their home as their workspace, which can create legitimate expenses. By claiming it, you reduce your taxable income and can pay less in taxes overall.Â
In many cases, the home office tax deduction is a popular tax deduction for self-employed individuals.
Who Qualifies for the Home Office Tax Deduction?
Eligibility depends largely on your employment status.
Self-Employed Workers and Business Owners
Freelancers, independent contractors, sole proprietors, and small business owners generally qualify if they meet IRS use requirements. If you report income on Schedule C, you’re likely eligible.
This includes people working as consultants, writers, designers, bookkeepers, real estate agents, online sellers and other self-employed professionals who manage their business from home.
Remote Employees and W-2 Workers
Working from home doesn’t automatically qualify you for the deduction.
Under the Tax Cuts and Jobs Act, most W-2 employees can’t claim the home office deduction for tax years 2018 through 2025 — even if you work remotely full-time and pay out of pocket for office expenses.
Who Qualifies vs. Who Doesn’t
| Category | Eligibility |
|---|---|
| Freelancers | Qualify if IRS use tests are met |
| Independent Contractors | Qualify if filing Schedule C |
| Sole Proprietors | Qualify if space is used exclusively and regularly |
| Remote W-2 Employees | Don’t qualify under current law |
| Hybrid Employees | Don’t qualify unless self-employed income applies |
| Side Hustlers | May qualify for the portion related to business activity |
Home Office Qualification Rules Explained
Even if you’re self-employed, your space must meet specific IRS rules.
Exclusive Use Test
Your home office must be used only for business.
A spare bedroom converted into an office qualifies. A dining table used for work during the day and meals at night doesn’t. Mixed-use rooms generally fail this test.
Regular Use Test
You must use the space consistently for business. Occasional or incidental use doesn’t count. While the IRS doesn’t define exact hours, using the space on most business days usually satisfies this rule.
Principal Place of Business Rule
Your home office must be your main place for administrative or management activities. You can still qualify even if you meet clients elsewhere, as long as you don’t have another fixed location for those tasks.
Home Office Qualification Tests (IRS Rules)
| Test | What The IRS Requires |
|---|---|
| Exclusive Use | Space must be used only for business |
| Regular Use | Space must be used consistently |
| Principal Place of Business | Home is main admin or management location |
| Separate Structure | Detached offices may qualify |
| Documentation | Measurements, receipts, photos, records |
Two Ways To Claim the Home Office Tax Deduction
The IRS offers two calculation methods. Choosing the right one can make a big difference.
Simplified Method
You deduct $5 per square foot of office space, up to 300 square feet.
- Maximum deduction: $1,500
- Minimal recordkeeping
- No depreciation or recapture
Best for small offices or those who want simplicity.
Actual Expense Method
You deduct a percentage of your actual home expenses based on office size. Eligible expenses may include rent, mortgage interest, utilities, insurance, property taxes, repairs and depreciation. Direct office expenses can be deducted in full.
This method often produces larger deductions but requires detailed documentation.
Simplified Method vs. Actual Expense Method
| Item | Simplified Method | Actual Expense Method |
|---|---|---|
| How It Works | Flat rate per square foot | Deduct percentage of actual costs |
| Deduction Rate | $5 per sq. ft. | % of home expenses |
| Square Foot Limit | 300 sq. ft. | No specific limit |
| Max Deduction | $1,500 | No fixed cap |
| Recordkeeping | Minimal | Detailed documentation |
| Best For | Small offices | Larger or high-cost homes |
Home Office Deduction Examples
Small Apartment Example
You rent a 900-square-foot apartment and use a 100-square-foot room exclusively as an office.
- Simplified method: $500
- Actual method: About 11% of rent and utilities
In many cases, the actual method results in a larger deduction.
Dedicated Room Example
You own a 2,400-square-foot home with a 200-square-foot office.
- Simplified method: $1,000
- Actual method: 8.3% of eligible home expenses plus depreciation
Expenses You Can and Can’t Deduct
| Expense Type | Deductible? | Notes |
|---|---|---|
| Rent | Yes | Percentage-based |
| Mortgage Interest | Yes | Homeowners only |
| Utilities | Yes | Business-use portion |
| Insurance | Yes | Proportional |
| Office Repairs | Yes | 100% if office-only |
| Whole-Home Repairs | Partial | Business percentage |
| Furniture & Equipment | Yes | Office-only |
| Lawn Care | No | Not business-related |
| First Phone Line | No | Personal expense |
Common Home Office Deduction Mistakes
| Mistake | Why It’s A Problem |
|---|---|
| Claiming mixed-use rooms | Violates exclusive-use rule |
| Overstating square footage | Raises audit risk |
| Using wrong method | Reduces savings |
| Missing receipts | Weak audit defense |
| Assuming W-2 eligibility | Not allowed |
Does the Home Office Deduction Increase Audit Risk?
Claiming a home office deduction doesn’t automatically trigger an audit. It’s now common and widely claimed.
Risk increases when deductions appear unreasonable, poorly documented or inconsistent with income. To protect yourself, keep records, measure accurately, and document your office space yearly.
How To Claim the Home Office Deduction When Filing
Self-employed taxpayers typically use Form 8829 or the simplified worksheet in Schedule C instructions.
Before filing, gather:
- Home and office measurements
- Rent or mortgage records
- Utility and insurance bills
- Repair receipts
- Photos of your office space
If you own your home or have complex expenses, a tax professional can help maximize the deduction while staying compliant.
Final Take to GO
The home office tax deduction can provide meaningful tax savings for self-employed individuals who work from home — when claimed correctly.
The key is meeting IRS eligibility rules, especially exclusive and regular use, and choosing the deduction method that fits your situation. Smaller offices may benefit from the simplified method, while larger or more expensive homes often see greater savings with the actual expense method.
Confirm eligibility, keep good records and calculate carefully. When in doubt, professional guidance can help you claim the deduction with confidence.
FAQ
Understanding how the home office tax deduction works can help you avoid costly mistakes and decide whether the deduction is worth claiming. These common questions break down the rules in plain language.- Can I take the home office deduction if I work from home part-time?
- Yes, as long as you are self-employed and the space is used exclusively and regularly for business. The IRS does not require full-time hours — what matters is consistent business use, not how many hours you work each week.
- Do remote employees qualify for the home office tax deduction?
- Generally, no. Most W-2 employees cannot claim the home office deduction for tax years 2018 through 2025, even if they work remotely full time and pay out of pocket for office expenses.
- Can I deduct internet and utilities for my home office?
- Yes, in many cases — but usually only under the actual expense method. You can typically deduct the business-use percentage of utilities and certain internet costs, based on the portion of your home used for business.
- What happens if my home office is also a guest room?
- If the space is used for personal purposes, it usually fails the exclusive-use test. That means you generally cannot claim the home office deduction for that area. The IRS expects the space to be dedicated solely to business.
- Is the home office deduction worth it for small spaces?
- It can be. The simplified method allows a deduction of $5 per square foot, up to 300 square feet (a maximum of $1,500 per year). Even small, dedicated offices can qualify if they meet the IRS rules.
Data is accurate as of Feb. 2, 2026, and is subject to change.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- IRS "How small business owners can deduct their home office from their taxes"
- U.S. Bureau of Labor Statistics "Self-Employment In the U.S. "
- IRS "Topic no. 509, Business use of home"
