1. What is IRS Home Office Deduction?

The IRS Home Office Deduction allows self-employed individuals and small business owners to deduct expenses for the business use of their home. This includes a portion of mortgage interest, rent, utilities, insurance, and other home-related expenses based on the percentage of your home used for business purposes.

2. How Does the Calculator Work?

The calculator uses the IRS Home Office Deduction formula:

Where:

• \( Sq\ Ft\ Business \) — Square footage used exclusively for business (ft²)
• \( Total\ Sq\ Ft \) — Total square footage of your home (ft²)
• \( Expenses \) — Total eligible home expenses ($)

Explanation: The formula calculates the business use percentage of your home and applies it to your total eligible expenses to determine your tax deduction.

3. Importance of Home Office Deduction

Details: Properly calculating and claiming home office deductions can significantly reduce your taxable income. This deduction is particularly valuable for freelancers, remote workers, and small business owners who work from home regularly.

4. Using the Calculator

Tips: Enter the square footage used exclusively for business, total home square footage, and your total eligible home expenses. All values must be positive numbers, with business square footage not exceeding total square footage.

5. Frequently Asked Questions (FAQ)

Q1: Who qualifies for home office deduction?
A: Self-employed individuals, independent contractors, and small business owners who use part of their home regularly and exclusively for business purposes.

Q2: What expenses can be deducted?
A: Direct expenses (for the office space only) and indirect expenses (mortgage interest, rent, utilities, insurance, repairs, and depreciation allocated based on business percentage).

Q3: What is "regular and exclusive use"?
A: The space must be used regularly for business and used exclusively for that purpose - not for personal activities.

Q4: Can employees claim home office deduction?
A: Under current tax law, employees cannot claim home office deductions unless they are self-employed or have business income.

Q5: Are there limitations to this deduction?
A: Yes, the deduction cannot exceed your business income, and there are specific record-keeping requirements. Consult a tax professional for complex situations.