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Home Office Tax Deduction: What it is, Formula, & How to Qualify

If you are a sole proprietor or single-member LLC and use your home as your office, you could qualify for a home office tax deduction. For example, if you use 15% of your home as an office, you can write off up to 15% of your household bills, such as utilities, insurance, and general repairs.

There are two methods that the IRS allows you to use when calculating your home office tax deduction; the simplified method and the regular method. For both methods, you will need to know the square footage of your home as well as the square footage of the space that you use as your home office. Before you roll up your sleeves and start crunching numbers, the IRS requires you to pass a couple of qualification tests, which we will discuss next.

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