How to Claim the Home Office Deduction on Your Taxes in 2023

In 2022, many workers experienced the convenience of working from home for their employers and some even had a side business as well. Remote work was increasingly popular that year due to higher percentages in specific job sectors like tech, legal or other occupations according to The U.S Bureau of Labor Statistics December report. Although most employees were not eligible for the Home Office Deduction (HOD), contractors & those with 1099 form income reported could potentially be qualified granted their workspace met IRS guidelines.

As stated in IRS Publication 587, to qualify to deduct expenses for business use of your home, you must 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.
  • In the case of a separate structure which is not attached to your home, in connection with your trade or business.

Rob Burnette, CEO of Outlook Financial Center, has outlined the IRS requirements to take advantage of a home office deduction. He emphasizes that your workspace must be exclusively used for work and it can even be designated as a 200 square feet area in your own home—just not at the kitchen table! There are two different ways to calculate this budget-friendly benefit: via ‘simplified’ or ‘regular method’, IRS.

The regular method uses a percentage of your home used for business as well as associated actual expenses like mortgage interest and other fees/expenses and is calculated on Form 8829. Those with documentation on hand might benefit more from this route since it’s not capped at $1,500 like the simplified option is—however, due diligence is required! To ensure one gets their desired advantage out of either choice in taxation deductions Burnette advises all clients to run calculations both ways before filing taxes.
If you find yourself still having questions or doubts about if you’re taking full advantage of these home office deductions, we at Coastal Tax are here to help! Please reach out to us at 843.549.5561 to book an appointment and we will be happy to answer any questions and concerns you may have.