While most “home office” tips are usually focused on establishing home office space to find new employment or pursue self-employment, this article is devoted to establishing a home office for employee use.
The IRS says if you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests establishing regular and exclusive use; and making it a principal place for doing business.
In cases where your home office business use is for the convenience of your employer, remember:
- You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.
- If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.
For a full explanation of tax deductions for your home office, refer to Publication 587, “Business Use of Your Home.” The rules in the publication apply to individuals.
In this publication you will find:
- The requirements for qualifying to deduct expenses for the business use of your home-including special rules for storing inventory or product samples.
- Types of expenses you can deduct.
- How to figure the deduction-including depreciation of your home.
- Special rules for daycare providers.
- Selling a home that was used partly for business.
- Deducting expenses for furniture and equipment used in your business.
- Records you should keep.
- Where to deduct your expenses.
And finally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.