Quickbooks, Bookkeeping and Accounting Blog

If you use a portion of your home for business, then you might qualify for a home office deduction. The following questions are designed to help you figure out if you qualify:

• Do you use a specific area of your home exclusively or regularly for business?
  If you have not designated a specific area of your home as your work area, then you do not qualify. Some examples:
  • You work long hours at home every night on your laptop on the couch in your living room.  You do not qualify for a home office deduction.
  • You have an office in your home used only for business. You may qualify for a home office deduction.
  • You have a spare bedroom in your house which doubles as your office and as a guestroom. You may qualify for a home office deduction. The fact that the room is not used exclusively for business means you are in a gray area, but if the room is used regularly for business and rarely as a guest room, then you can probably get away with claiming it. Ask your accountant what he or she thinks.
• Why do you work at home? Is it for your own benefit or for your employer’s benefit?
  The IRS requires that the use of your home for business be for the convenience of the employer. Some examples:
  • You have a fully functional workplace at your company’s office, but prefer to work at home sometimes and your employer allows you to do so as long as you get your work done. Since your choice to work at home is for your own convenience, not your employer’s, you do not qualify for a home office deduction.
  • You work for an international business and manage employee’s around the world, and need to be on email and/or participate in conference calls at odd hours. Therefore, your employer expects you to do some regular work from home. Since this work is for your employer’s convenience, you may qualify for a home office deduction.
• Does your employer pay you rent for your office space?
  If so, then you do not qualify for a home office deduction.
• Are you using the office in your home for business?
  Simply having an office in your home in which you conduct your personal business does not qualify you for a home office deduction. The space must be used for clear business purposes. Some examples:
  • Using your office space for investment activities, even though you are seeking profits, does not qualify you for a home office deduction.
  • Using your office space for hobbies does not qualify you for a home office deduction.

Finally, you can read more about these requirements in publication 587, Business Use of Your Home.