Tax Info - Home Office Deductions

Taking home office deductions on your taxes is something you can do if you use a certain part of your home solely for conducting business. If you meet with clients, store inventory, or anything like this in a room, it counts under the home office deductions rule. However, if anything else is done in this room of the home, for instance, an office used to do business during the day, but to entertain the children at night with computer games does not qualify.

The amount of the deduction depends on the percentage of your home being used for business purposes. You can either deduct the percentage based on the total number of rooms in the home or the total square footage in the home. The deduction may be limited if the business expenses are greater than business income. Special rules apply to those who are storing inventory in their home or running a qualified daycare business.

If you are self employed, you can claim the deduction using IRS form 8829. If you are working from home as employee for another business, there are different rules when it comes to the home office deduction. If you use your home office for an employer and want to be able to take the deduction, it must be for the exclusive use and benefit of the employer.