Sarah is an Enrolled Agent with the IRS and a former staff writer at Keeper. In 2022, she was named one of CPA Practice Advisorâs 20 Under 40 Top Influencers in the field of accounting. Her work has been featured in Business Insider, Money Under 30, Best Life, GOBankingRates, and Shopify. Sarah has spent nearly a decade in public accounting and has extensive experience offering strategic tax planning at the state and federal level. Her clients have come from a wide range of industries, including oil and gas, manufacturing, real estate, wholesale and retail, finance, and ecommerce, and she has handled tax returns for C corps, S corps, partnerships, nonprofits, and sole proprietorships. In her spare time, she is a devoted cat mom and enjoys hiking, painting, and overwatering her houseplants.
Can I claim the home office deduction for taxes?
A free quiz by
Do you have 1099 income?
This includes any freelancing, small business, and self-employment income over $600 / year.
For your 1099 work, do you commute to an office?
If you already have an office space that you have to pay for, then select âNoâ.
Do you work from home regularly ?
Think specifically about your 1099 work.
Do you have a dedicated workstation at home, used exclusively for work?
Only select yes if you work from home at least once per month.
Bummer!
You donât qualify for a home office. However, you can still claim plenty of other write-offs, and you should download Keeper Tax.
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CONGRATS!
You can claim home office write-offs!
Over 1M freelancers trust Keeper with their taxes
Keeper is the top-rated all-in-one business expense tracker, tax filing service, and personal accountant.
Here are some examples of tax write-offs you can claim:
A desk, chairs, lamps, and other home office necessities are all tax write-offs.
Your Comcast bill is a tax write-off. You need internet to do your job!
Whether you pay rent or own your home, a portion of it is tax-deductible.
Gotta keep the lights on in your home office! A portion of your electricity bill counts.
It'd be hard to work in an office without running water, huh? You water bill counts.
Whether you pay rent or own your home, a portion of those expenses is tax-deductible.
Over 1M freelancers trust Keeper with their taxes
Keeper is the top-rated all-in-one business expense tracker, tax filing service, and personal accountant.
Working from home is a beautiful thing. That is, until you see your first electricity bill and your heart drops to your stomach.
While itâs more affordable than renting a separate office space, working from home isnât cheap. Luckily, there is a tax write-off that can help alleviate these pains: the home office deduction.Â
What is the home office deduction?Â
The home office deduction lets self-employed people who work from home write off a portion of their living expenses on their taxes. You can claim the home office deduction whether you rent or own your home, and you can use it wherever you live â a condo, an apartment, or a single-family house all count. You canât use it for a hotel or other temporary shelter.
Hereâs the rationale: If someone pays for an office outside their home, it would be a no-brainer write-off. So why shouldnât people get a tax break if they spend money repurposing part of their home as a workstation?
So if you have a designated workspace in your home, you might be eligible to write off part of what you spend on housing. Letâs take a closer look at who qualifies.Â
Who can claim the home office deduction?Â
As nice as it sounds to write off rent on your taxes, not everyone is allowed to. To qualify for this write-off, you:Â
- Must have self-employment income
- Must have a designated work area
- Must regularly use the space
- Canât have access to another office space
You have to meet all four of these rules. Letâs look at them, one at a time:Â
Must have self-employment income
The home office deduction is a business write-off, so you need self-employment income to claim it. That can mean you work as a:
- Freelancer
- Independent contractor
- Gig worker
- Small business owner
Your self-employment work can be a side hustle
Any kind of self-employment works. It doesnât need to be your main source of income â a side hustle is fine.
For example, pretend youâre an editor who works remotely for an online magazine. On your own time, you earn some money self-publishing books on Amazon. Even though your indie author side hustle is a small portion of your income, it still qualifies you to claim the home office deduction.Â
Your self-employment work should require an office
To qualify for the deduction, your self-employed work should be the type of thing you canât do without some kind of office space. Not all work counts.
For example, if you drive for Uber, you donât need an office. The majority of your work can be done from your car. Thatâs the appeal of gig jobs â thereâs very little administrative overhead.Â
Compare that with a plumber, who spends most of his day out at client stops, but uses his desk to schedule appointments, handle invoices, and order parts and supplies.
The second very clearly needs a home base for operations, and the first does not.Â
Traditional employees donât qualify
W-2 workers arenât eligible to take this deduction. That is, unless they:
- Have both 1099 and W-2 income
- Do their 1099 work from homeÂ
Must have a designated work area
First things first, letâs define our terms. What counts as a âwork areaâ?
Believe it or not, a work area does not need to be a separate room. Any of the following examples count:Â
- â Desk in the corner of your room
- â Garage
- â Basement
- â Spare room
- â Granny flat
- â Attic
- â Walk-in closet
- â Houseboat
- â Shed
- â Barn space
- â Studio
- â Mobile home
Your work area should be used exclusively for work
Whatever portion of your home youâre trying to claim, the key is that itâs designated for your work.
Rule of thumb: As long as your area is primarily reserved for business purposes, youâre in the clear.Â
Life is messy. Even people with offices outside the home canât avoid having the two mix. If you take the occasional personal call at your desk or hide Christmas presents from the kids in your space, that wonât disqualify you.Â
However, something like the kitchen table doesnât count. Or the living room desk where your kids sometimes do their homework. If itâs a shared space between your work life and your personal life, it canât be used for the deduction. â
Exceptions to the âexclusive useâ rule
There are two notable exceptions to this requirements:Â
- Storage
- Daycare services
Iâve worked with people who have been missing out on the home office deduction for years because they didnât realize storage counted. Say you keep any of the following in your home:
- Inventory
- Samples
- Work equipment
In that case, it doesnât matter if you use the space exclusively for work. The only requirement here is that your home is the only location for your business. That means you canât have another location where you can store your goods.
For example, say you sell your own furniture on Etsy. If you store your woodworking tools and other supplies in your garage, you can claim that space as a home office. It doesnât matter that you use it for personal storage too. Â
The same is true if youâre an eligible daycare provider: You donât have to have an exclusive area of your home reserved for your work. (The method of determining your business-use percentage will be different from whatâs described below, however.) If you think this might apply to you, refer to page 12 of the IRS instructions for more guidance.Â
Must use the space regularlyÂ
This is the vaguest rule of them all. The IRS doesnât provide a clear definition for what âregular useâ means. However, if you only use your space a few times a year, thatâs not going to fly.
Rule of thumb: You should be using your space weekly, or several times a month â whatever is consistent with your industry.
For instance, if you make and sell fireworks, you might only use your space for a few months during the summer. Thatâs okay, considering that your industry tends to be seasonal anyway.
What if you donât use your space the entire year?Â
Thatâs okay! You arenât required to use it year-round to claim it.
If you start a business in March and decide by August that youâd rather go back to a W-2 job, you can claim your home expenses for the months of March to August. (More on this below!)Â
Canât have access to another office space
This is another rule that people sometimes trip over. You can only claim the home office deduction if you donât have access to an office outside of your home.
If you periodically do your work at a coffee shop, that wonât disqualify you. But if you have a WeWork membership, no home office deduction for you!Â
However, there are two exceptions to this rule.
Exception for client meetings
If you regularly meet with clients in your home, you can have other work locations outside of your home.
For example, letâs say you work as a massage therapist and regularly see clients at home. Three days a week, you freelance at a local spa and have access to one of the rooms while youâre there.
Since you conduct much of your regular business through your home office, you can still claim the deduction. Itâs integral to your business.Â
Exception for office space at your day job
The âno other officeâ rule also doesnât apply to offices that arenât yours.
In other words, if you have an office through your W-2 job, that wouldnât disqualify you from claiming a home office deduction for your freelance work. (Your boss would probably rather you keep the side hustle at home anyway.)
What home expenses qualify for the home office deduction?Â
Now for the fun part! Writing off your home expenses on your taxes. All of the following costs can be included in your home office deduction:Â
- đ Rent
- đ° Utilities
- đ Wi-Fi
- đ Home security costs
- đ° Mortgage interest
- 𧞠Property taxes
- đ Depreciation
- âď¸ Renters or home insurance
- đŞ Plumbing
- 𧽠Cleaning services
- đ Electrical or AC repairs
- âď¸ Home improvements
For quick reference, feel free to use our home office cheatsheet. A print-friendly version is available as well.
These expenses are very similar to your other business write-offs. Not only do they directly lower your self-employment tax, but theyâre also trackable in the Keeper app as well!
So if youâre feeling uncertain about what might count, let us take the guesswork out of it. Our software will scan your bank and credit card accounts for every eligible home office expense. When itâs time to file, simply answer a few questions about your home office, and we can handle the rest.Â
Expense tracking has never been easier
Keeper is the top-rated all-in-one business expense tracker, tax filing service, and personal accountant.
Indirect vs. direct home office expenses
The amount of each expense you can write off depends on whether itâs a direct or indirect cost for your home office. Letâs talk about the difference between the two.
Indirect costs are partially tax-deductible
Iâm going to burst the bubble now: You canât write off your entire rent for the year. Thatâs because itâs an indirect home office expense.
An indirect cost is something you pay for your entire home â itâs not localized to your workspace. Most of the items listed above are indirect costs.Â
For these types of costs, you canât write off the entire amount you pay. Your deduction is limited to the portion of the expense thatâs actually going towards your office, as opposed to the other parts of your home. (This is called your âbusiness-use percentage,â which weâll get into down below.)
Direct costs are 100% tax-deductible
A direct cost is something exclusively for your work area â which means you can write off 100%.
For instance, if you redo the light fixtures in your basement, which youâve converted into a home office, you get to deduct the whole amount it cost you.
Here are some other examples of direct costs:
- đ¨ Painting your home office walls
- đŞ Replacing window blinds or shutters
- đ¨ Changing the air filters in the office vents
Write-offs for client-facing home offices
Some write-offs are allowed if you regularly use your home office to meet with clients. (These meetings have to be in person: A Zoom call wonât cut it.)
If you often take meetings a home, you could write off a portion of expenses like:
- đł Your landscaping bill
- đŁď¸ The cost of repaving your driveway
- 𧹠Adding ramps or walkwaysÂ
These sorts of expenses can make clients feel more comfortable visiting your home â after all, no one likes finding tree sap on their windshield from an unpruned branch.
More importantly, they protect the business owner from lawsuits. If the pothole on your drive causes damage to a clientâs car, or if the overgrown shrubbery causes someone to trip, you could be held liable.
While anyone meeting clients in their home should have liability insurance, preventative measures like landscaping and home improvements will minimize your risk of needing it.
If you donât take regular meetings at home, however, I wouldnât advise trying to claim any of these costs. They only become necessary when you have a client-facing office.Â
Uncommon home office write-offs you can takeÂ
Every living setup is a little bit different, and each industry has its own needs. That means there could be costs that apply in one situation and not another.Â
Here are a few job-specific home office deductions:
- đ A home gym for a personal trainer
- đ A sound system for a dance teacher
- đĄ Studio lighting for an artist
â
These are only acceptable for client-facing home offices. Having a home gym as a personal trainer just to stay in shape is a personal investment, not a business one.
How much can you write off for a home office?
Your home office deduction is limited to either:
- Your direct expenses, a portion of your indirect expenses, and any unused deduction from prior years (more on this below)
- $1,500 flat
Which one? It depends on which of two possible methods you use for taking this deduction. Weâll get into that soon, but thereâs one other rule you have to know.
You canât deduct more than your net income from self-employment
The upper limit of your deduct is the amount youâre earning from self-employment after expenses.
For example, if you have $500 of business income and $400 of business expenses, the most you could get from your home office deduction is $100.
If you have $500 of business income and $500 of business expenses, your home office deduction would be $0.Â
If you donât qualify this year, you can claim it next year
Good news: If your net income is too low to take a home office deduction, that write-off isnât lost to you forever. Earn enough the following year, and you can claim it then. (This is called âcarryover,â and weâll get into it more later.)
For instance: Imagine your business has no income this year after subtracting your other write-offs. You wouldnât be allowed to use your home office deduction. But you can roll it over to use on next yearâs return.
How to calculate your home office deduction
If you have too much self-employment income â a good problem to have! â your home office deduction is a great way to lower self-employment taxes.
There are two ways to claim it. You can either:
- Write off a portion your actual home expenses
- Claim a fixed rate using the simplified optionÂ
Letâs look at the two options in more detail:Â
Actual home office method
This option lets you write off a portion of what you paid during the year, based on how much of your home you used for work. This is the âbusiness-use percentageâ of your home.
To find how much you can deduct for each expense, youâll multiply the amount you spent by your business-use percentage.
Hereâs how it works. Letâs say you rent an apartment and pay $800 per month. The apartment is 900 square feet, and the desk space in your bedroom takes up 100 square feet.
That makes your business-use percentage 11%. Multiply that by your monthly rent, and youâll get to your deduction, $88 (800 x 0.11 = 88). This percentage would be applied to your other housing expenses as well.Â
When to calculate your deduction using monthly vs. annual expensesÂ
In the example above, I used monthly expenses rather than annual expenses. Hereâs how to figure out which figure makes the most sense to use:
- If you had the same work setup all year, use your annual living expenses
- If you moved or changed setups during the year, use your monthly expenses based on when you had each setup
For example, say you moved from Alaska to Alabama at the end of March. Youâll use your monthly expense from January to March to calculate the deduction for your Alaska office. And youâll use your expenses from April to December to calculate your Alabama write-off.Â
Youâll need to figure out your business-use percentage for each location, and attach multiple copies of Form 8829 to your tax return. (More on this later!)Â
Simplified home office method
This usually results in a smaller tax deduction than using the actual method, and it also caps your write-off at $1,500 total. But if youâd rather not deal with math, the simplified home office deduction is for you.
This method gives you a flat rate per square footage of your work area, currently $5 (with a maximum of 300 square feet). So rather than itemizing all your actual housing costs, youâll just take the fixed amount put out by the IRS.
Hereâs how it works: Using the example above, your 100 foot desk space would result in a $500 deduction (5 x 100 = 500).
The simplified method is often better for single-room offices and businesses with a small footprint. The actual expenses method can work better if your business makes up a large part of your home.
Now that you know how to calculate your deduction, letâs take a look at how to claim a home on your tax return:Â
How to claim the home office deduction on your taxes
Because of the unique nature of this write-off, the home office deduction has its own form (separate from the Schedule C you use for most business write-offs). This is Form 8829, âExpenses for Business Use of Your Home.â
Youâll fill out this form if you use the actual method. If youâre choosing the simplified method, you can just claim your home office on Schedule C.
Note that you can use as many of these forms as you need. If you lived in three different places during the year and had three different home offices, youâd complete three separate 8829s â one for each office and corresponding expenses.Â
Hereâs how to claim your deduction. Weâll follow along with a taxpayer called Joe as he fills out his forms.
Step #1: Calculate your business-use percentage on Part 1 of Form 8829
In the very first section, youâll get to use the math we discussed earlier in this article and report your business-use percentage.Â
List the square footage of your workstation on line 1
Use measuring tape to get a square footage number. But keep notes for the figure you came up with!
List the total square footage of your home on line 2
Then, just like we talked about, youâll divide your business space by your total space to determine your business-use percentage.
Youâll carry this down to line 7. You can skip lines 4-6 unless youâre a daycare provider.Â
Step #2: Fill out your home office expenses on Part 2 of Form 8829
The next section of the form is where youâll list all your applicable housing costs.
Before entering these, however, youâll want to input the ânet incomeâ from your Schedule C on line 8. Your net income is your 1099 income minus your other business write-offs.
Stop if your net income is zero or less
If thatâs the case, you canât use the home office deduction.
In this example, Joe has $5,000 of net income from his schedule C, so heâs eligible to claim the home office deduction.
Split out your direct and indirect expenses
Youâll notice two columns:Â
- (a) Direct expenses
- (b) Indirect expenses.
Your direct home office expenses (like painting your office wall) will go in column a. Your general home office expenses (like rent and utilities) will go in column b.
Youâll multiply the total in column by your business-use percentage, then add it to your total in column a.
Divide up your expenses by type
As you can see, there are specific rows for some common housing costs, like insurance and rent. All housing expenses that donât have their own row will go on line 22, âOther expenses.â.Â
Step #3: Deal with depreciation and carryovers on Parts 3 and 4 of Form 8829
This is where youâll calculate any depreciation on your home. If you rent, this section wonât apply to you. This is only for homes that you own.
For instructions on how to calculate depreciation, see the IRS instructions. Better yet, use Keeper. After asking you a few brief questions, our team can calculate the entire home office deduction â including depreciation! â for you.
Lastly, any home office deduction you werenât able to use last year can be carried over to the current year. Â
Step #4: Claim your home office on your Schedule C
Youâve reached the end of Form 8829, but youâre not done yet!
To write off your home expenses, youâll need to put the total from line 36 of your Form 8829 on line 30 of your Schedule C.
If youâre using the simplified home office deduction, you can calculate it directly on your Schedule C using line 30.Â
Step #5: See how much you saved
Now that weâre done walking through this process, we can see how much Joe saved on his taxes.Â
If he didnât claim his home office, Joe would have owed $765 of self-employment tax on his $5,000 of net income. After claiming the home office deduction, he ended up owing only $551 in self-employment tax. Thatâs $215 in savings!Â
Will you get audited for claiming a home office?Â
No, claiming the home office deduction does not increase your audit risk. Itâs an extremely common and valid tax write-off.
This is an understandable fear for many people, and Iâm happy to put your minds at ease.
That being said, donât go nuts. Be honest about what you claim, and keep records to support it. If you try to write off more than 50% of your housing costs, that might look fishy. But if you take 20-30% and you have reliable records to back it up, donât sweat.
What are some examples of reliable records?Â
- Records from Zillow, your property manager, or the Recorderâs Office listing the size your home
- Photographic evidence of the size and layout of your home office
- Bank statements or Keeper records of your housing expenses
Best practice is to keep these records for three years after the date you file your return. And just to stress this again, be honest. If your home office genuinely takes up 50% of your home â claim it! Just understand that itâll be up to you to prove it was legitimate if the IRS doesnât buy it.