If you’re someone who primarily works from the comfort of their home, you might find yourself wondering, “Can I write off my home office?” This is certainly a valid question and one that can possibly save you a lot of money when tax season rolls around. Learn what (if anything) is tax-deductible when your apartment doubles as your office space!
But before we begin, please know this post is not intended as legal or tax advice; rather, it’s simply meant to provide some helpful resources for your tax journey. If you need additional support or guidance as you’re filing, we encourage you to seek professional tax prep services.
Can I write off my home office?
With so many of us working from home these days, there’s a lot of curiosity around whether this situation can yield any tax breaks. Unfortunately, you won’t qualify for the home office tax deduction as a full-time remote employee in most cases.
In other words, if you work remotely — but you’re not an employer or business owner — you won’t be able to write off your home office. With that said, this might be available as a state tax deduction for *some* remote workers, so don’t give up all hope!
Anyone who’s self-employed or runs a business out of their home will likely have better luck with this write-off. According to the IRS, there are two basic requirements to qualify for a home office deduction: (1) regular and exclusive use and (2) principal place of your business.
The term ‘regular and exclusive use’ means you regularly use part of your house or apartment exclusively for conducting your business. The second criteria (principal place of business) implies your home office is either the primary location of your business or space where you frequently meet with customers or clients.
For instance, if you run a business out of your apartment, like an e-commerce store, you may be eligible for this deduction. Likewise, if you are “self-employed” as a freelancer, you may also meet this requirement.
How do I calculate my home office deduction?
If you meet the criteria stipulated by the IRS, you’ll want to know how to deduct a home office to net the most significant savings possible. There are two ways to go about this: (1) the regular method — keeping track of your expenses throughout the year and itemizing them on your tax forms, or (2) using the simplified option (if you’re eligible for it).
The regular method involves diligent record-keeping of your year-round expenses and honest reporting in your tax form. With this method, you can write off things like the cost to paint or repair your office space, which can add up pretty quickly!
The actual-expenses approach also allows you to deduct a portion of some indirect home expenses, based on the square feet you use as your office. What this means is, if your office is one-tenth of the total square footage in your house or apartment, you can deduct 10% of your mortgage interest or rent and even some of your utilities (like water and electric bills).
The simplified version of the home office deduction can be used if your office measures 300 square feet or less. For those who qualify, the IRS will give you a deduction of $5 per square foot of your home that’s used for business, up to $1,500 for a 300-square-foot-space.
If you’re unsure which choice is right for you, know that the simplified method can work well for single-room offices or smaller operations, while actual-expenses might work better if your business takes up a larger part of your home.
Additionally, the simplified route is typically easier to compute, resulting in a smaller tax break overall. The regular method requires more thorough recordkeeping (and more time to gather your receipts), but it could provide you with a larger deduction in the end.
Find a Place for Work and Life
Are you thinking of upgrading your apartment so you can have a dedicated home office? With the help of ApartmentSearch, you can easily explore two-bedroom apartments and live-work spaces for rent near you! This way, you’ll have an extra room you can use as your very own office, which is sure to help boost your morale and productivity.