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Rolando Lopez Oct 26, 2019 2:15:57 PM 3 min read

Maximize Your Home Office Tax Deductions

Home Office Expenses

One of the best tax deductions available to almost all business owners under the US Tax Code is the Home Office Deduction. In this modern economy, who doesn’t work from home? The best part is, you don’t even have to own your home. Business owners who rent are also eligible to benefit from their home offices and work spaces.

Only two requirements need to be met to quality for the home office tax benefits, they are:

  1. Regular and exclusive use of your home office or space. Meaning it must be an area of the house that you have designated as your office when working from home. Additionally, it is sectioned off to conduct your business regularly. Even your garage or a detached building on your property counts! 
  2. It must be a principal place of your business.  You must be able to prove that you use the office or work space to operate your company. Even if you have a separate principal office outside of your house, you will still qualify if you use your home office space regularly like on the weekends or evenings!

There are only two methods to calculate your deduction, the Simplified Method and the Actual Expenses Method. The first step for both methods requires you to calculate the business use percentage of your home office by dividing the square footage of the office space vs the total square footage of your home. 

For the Simplified Method, all you have to do is multiply the office or work space square footage by $5 for the 2019 Tax Year, up to a maximum of $1,500 can be deducted. So if your office is 300 Sq Ft, then your total deduction is $1,500 and you would be maxed out. 

The $1,500 max out of the simplified method is why I myself use the Actual Expenses Method. For this method you get to multiply your business use percentage that you calculated by all ACTUAL expenses incurred during the year. The trick is, you must track and account for those expenses and their related bills and payment receipts. The Actual Method number is almost certainly always larger than $1,500. Sadly, many leave tax deductions on the table due to lack of documentation and understanding of what is actually deductible! Below are some expenses available to business owners with home offices:

Expenses Available to Deduct:

  1. Mortgage Interest
  2. Property Insurance
  3. Property Taxes
  4. Rent
  5. HOA Fees
  6. Utilities
  7. Home Office Furniture & Supplies
  8. Home Repairs & Maintenance
    1.  Repairs & Maintenance
    2. Landscaping
    3. Pest Control
  9. Depreciation
  10. Security System
  11. Home Office Furniture & Supplies

Are you currently using all of your home office deductions? Contact us to review your business deductions.