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The Basics on Simplified Home Office Deductions

Audio versions available here:

Length: approx. 1 min. 10 sec.

Welcome to the XQ CPA Tax Day Checklist, a series sharing tax tips every day leading up to the April 15th tax filing deadline. Today's topic is home office deductions. If you are self-employed and work from home, the IRS encourages you to claim the home office deduction. Keep in mind that in order to qualify, a portion of your home must be used exclusively for business. You can conduct business outside of your home, but your home must also be in use for this deduction.

Like auto deductions, there are two methods to this deduction. Today, we will cover the simplified method. This method involves a predetermined deduction rate per square foot of your home office.

The current rate is $5 per square foot with a maximum size of 300 square feet. This means that the largest deduction you can claim under this method is $1,500. To claim this deduction if you are a sole proprietor, fill out Schedule C on your tax return.

Some business owners believe that the home office deduction is risky, but that’s far from the case. The IRS does not penalize you for claiming (and substantiating!) a valid tax deduction.

Want more tax tips? XQ CPA has all the latest and greatest tax tips and business news for 2023 tax filing. Tune in tomorrow to learn about the second home office deduction method.

Phone: 832-295-3353

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