H2R CPA Blog

H2R CPA Tax Tip: Home Office Deduction

by H2R CPA Team

Did you know…?

There is a simple way to deduct your home office on your tax return without having to make the complex calculations, allocations, and substantiation of expenses otherwise required.

Home office deductions are available to both self-employed taxpayers and employees. It’s important to evaluate whether your home office qualifies for a tax deduction. The home office deduction provides an opportunity to claim expenses such as utilities, repairs, and insurance — whether you rent or own your home.

Taxpayers who qualify may use a simplified deduction calculated at $5 a square foot for up to 300 square feet of an area in a home that is used regularly and exclusively for business. The deduction is capped at $1,500 a year.

Even more advantageous is that choosing to use the simplified method has no impact on the taxpayer’s ability to deduct qualified residence interest or property taxes fully on Schedule A (if they itemize their deductions). Under the simplified method, depreciation on your home is also deemed to be zero, thereby eliminating the need for any depreciation recapture on a future sale of your home.

The rules require that you use your home office on an exclusive and regular basis for business purposes. While you’re not required to have a separate room, any personal or family use of your work area is a disqualifier.

At H2R CPA, we are pleased to assist clients with determining the appropriate tax deductions for their unique business situations. Contact us at 412-391-2920 or team@h2rcpa.com for more information.