Home Office Deduction: What You Need to Know About Working From Home

2020 was a long year that was full of unprecedented changes. Considering tax season, those changes may lead you to wonder how your taxes will be affected. If you began working from home as a result of the COVID-19 pandemic, you may qualify for the home office deduction. This deduction is for those who use part of their home for business to deduct expenses for business use.

Who can claim this deduction? Self-employed individuals who use a part of their home to work or meet with customers can claim this deduction. Unfortunately, this does not include those who work from home full-time as a W-2 employee.

For those with self-employment income, you may qualify for the home office deduction if you use part of your home:

- Exclusively and regularly as your principal place of business;

- Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business;

- If you use a separate structure, not attached to your home, in connection with your trade or business;

- If, on a regular basis, you use part of your home for business-related storage use;

- For rental use; Or

- As a daycare facility.

Generally, these types of deductions for a home office are based on the percentage of your home devoted to business use. The deduction applies to direct expenses, such as maintenance and repair, as well as indirect expenses like utilities.

The professionals at The Center are more than knowledgeable on the home office deduction and how to calculate such expenses, for more information, please contact us at (618) 997-3436.