Are you eligible for the IRS home office deduction?

Many self-employed individuals are likely eligible for the benefit

The coronavirus pandemic shut many offices around the country resulting in mass work-from-home policies, and some people may be eligible to take advantage of an IRS tax break for home offices.

Continue Reading Below

The law, as modified by the Tax Cuts and Jobs Act, mainly applies to self-employed individuals and small business owners, meaning employees do not qualify.

In order to be eligible to claim the deduction on certain expenses you must regularly use part of your home for the exclusive purpose of carrying out business. You also must be able to show that your home is used as the principal place of business – but you may be eligible even if you conduct business at other locations, too.

You may also be eligible if you use a portion of your home to regularly meet with patients or clients as a routine part of your business schedule.

PAYROLL TAX HOLIDAY: HOW MUCH COULD YOU SAVE?

If you qualify, you are generally allowed to deduct expenses like mortgage interest, insurance, utilities, repairs and depreciation for the home office.

The deductions are generally based on the percentage of your home dedicated to business purposes (for example if you use one room in your house as an office, you would need to calculate the percentage of your home that room comprises).

The agency unveiled a simplified calculation, too, which carries a rate of $5 per square foot, up to 300 square feet, carrying a maximum deduction of $1,500.

It is up to the taxpayer to choose between the two methods.

The deduction is available to both homeowners and renters, and applies to any type of home.

CLICK HERE TO READ MORE ON FOX BUSINESS

According to Stanford economist Nicholas Bloom, about 42 percent of the U.S. labor force is working from home full-time, while only about 26 percent are working from their normal place of business.

Many experts predict remote working will be a trend in the labor market even after the pandemic threat begins to wane.

GET FOX BUSINESS ON THE GO BY CLICKING HERE