Check the use of the space
Business use generally must be regular and exclusive, with additional requirements such as qualifying as your principal place of business. Specific exceptions apply to certain daycare and inventory-storage activities.
Compare the methods
Eligible taxpayers may compare the simplified method with actual expenses. The actual-expense method allocates eligible home costs and can involve depreciation. The simplified method reduces recordkeeping but still requires support for eligibility and area.
Keep the supporting records
Measure the workspace and the home. Save expense records and note changes in use. Employee and self-employed situations differ; do not assume that an employer’s remote-work arrangement gives the same deduction as a qualifying business.
A practical example
A spare room used only and regularly for a qualifying business differs from a dining table also used for family meals. Describe the actual use of the space before calculating any deduction.
What to gather
- Workspace measurements and dates of use
- Description of business activities
- Housing costs, utilities, and repair records
- Purchase and improvement records if applicable
Official references
General educational information, not individualized tax, legal, or investment advice. Federal rules are summarized; state rules and your circumstances may differ. Check the rules for your tax year before acting.