Taxes Q & A- How Can You Qualify for the Home

How Can You Qualify for the Home Office Tax Deduction?

People who use a portion of their homes to conduct business may be eligible for a home office tax deduction. This applies to independent contractors who work from home exclusively and to those who regularly use a home office when working for an employer. The Internal Revenue Service (IRS) has certain requirements that a person must meet to be eligible for the deduction.

Qualifications for a Home Office

To count an area of the home as a home office, a person must use the area for business only. This means the home office cannot be used for activities that are not related to work. If someone uses his kitchen table to write invoices and dine with his family, for example, he cannot claim a home office deduction for the kitchen.

A room that is also used for other activities can still qualify as a home office if the office area is separated from the remainder of the room. For example, if a partition separates an office area within a dining room, the office area qualifies so long as other conditions are met. When calculating the deduction, the person can only include the square footage used for the office and not that of the entire room.

Detached buildings such as garages can also count as home offices if they’re used regularly and exclusively for business. Regular use means the home office is used frequently rather than on occasion. Making a profit from a home-based activity doesn’t necessarily make an area qualify, however. People should consult the IRS or a tax professional prior to claiming the deduction to ensure they meet the qualifications.

Exceptions to Home Office Tax Deductions

There are a few exceptions to this exclusive-use rule. People who provide day care services in their homes are allowed to claim home office deductions even if they use the same areas of their homes for personal activities after regular business hours.

Those who use portions of their homes to store business-related materials such as inventory, supplies and products may also qualify for the deduction, regardless of whether they occasionally use the same rooms for other items or activities. This exception only applies to people who use the home exclusively for storage of business materials. Those who also store items in buildings or work sites away from home do not qualify.

A qualified tax professional can help people determine which areas of the home qualify as well as the exact deductions they can claim for using a home office.