Home Office Tax Deduction

What is the home office tax deduction?

Publication 587 says you generally cannot deduct items related to your home, such as rent, utilities, repairs, insurance or depreciation, as business expenses. The exception is when you use part of your home for business and meet specific requirements. Then you may deduct the business share of those costs, up to a limit.

The IRS counts a house, an apartment, a condominium, a mobile home or a boat as a home, as long as it provides basic living accommodations. It also counts structures on the property, such as an unattached garage, studio, barn or greenhouse.

Who can claim it?

Someone who uses part of their home for their own trade or business, such as a freelancer, a 1099 worker or a small business owner who files Schedule C (Form 1040). The part of the home must be used regularly and exclusively for business, and it must be your principal place of business, a place where you meet clients, or a separate structure.

An employee who works from home cannot claim it. In the IRS flowchart in Publication 587, the question "Are you using the part of your home as an employee?" ends with no deduction when the answer is yes.

What are the two ways to figure it?

Actual expenses: you work out the percentage of your home used for business and apply it to the costs of running the home, then report it on Form 8829. Simplified method: you multiply $5 by the area you use for business, up to 300 square feet, so the most you can deduct is $1,500.

You choose the method each tax year. The simplified method is an alternative to calculating and substantiating actual expenses, as the IRS puts it, and it removes the percentage math.

How do I claim it?

On Schedule C (Form 1040), line 30. With actual expenses you figure the amount on Form 8829. With the simplified method you use the Simplified Method Worksheet in the Instructions for Schedule C.

Either way, the deduction cannot be more than the gross income from the business use of your home, after the business costs that are not related to the home.

Which home office guide is for me?

Start with Can I Deduct My Home Office to see the IRS tests. Renters can go to Home Office Deduction for Renters. The Simplified Home Office Deduction guide works through the $5 rate. Work From Home Tax Deductions explains the difference between an employee and a self-employed person, and Home Based Business Tax Deductions covers network marketers, affiliate marketers and street vendors.

What proof do I need?

Keep the documents behind the numbers on your return. For a home office that means proof of what you paid for rent, utilities, insurance and repairs, and a record of the size of the space you use for business. Our hub Receipts for Taxes explains what each document should show and how long to keep it.

Sources: IRS Publication 587 (2025), Business Use of Your Home (read October 31, 2026); IRS Publication 334 (2025), Tax Guide for Small Business (read October 30, 2026); IRS Publication 17 (2025), Your Federal Income Tax, miscellaneous deductions (read October 31, 2026); IRS, What kind of records should I keep (read October 30, 2026).