Surgent's Home Office Rules

Overview

Since 2017, employees have not been eligible to take an itemized deduction for a home office. The Tax Cuts and Jobs Act suspended all miscellaneous itemized deductions for tax years 2018 through 2025. That deduction is scheduled to go into effect in 2026. Self-employed individuals can deduct office expenses on Schedule C, Form 1040. The home office deduction includes typical office-connected expenditures such as supplies, postage, computers, printers, and all the other ordinary and necessary expenses a person would have in connection with running a home office.

The home office tax deduction for the self-employed would cover expenses for the business use of a home, which includes mortgage interest, rent, insurance, utilities, repairs, and depreciation. This program discusses many of the most important issues relating to the deductibility of home office-related expenses.

Prerequisites

None

Objectives

• Understand the rules relating to taxpayers who are entitled to deduct expenses associated with a home office

Highlights

• Calculating the home office deduction
• Actual expense method
• Simplified expense method
• Definition of a home for purposes of the home office deduction
• Whether working-from-home employees can claim a home office deduction
• What is a “separate, identifiable space?”
• The “regularly and exclusively used” rule
• Defining a “principal place of business”
• Meeting clients, patients, and customers
• More than one trade or business
• Special rules that apply to daycare providers
• Separate, free-standing structures
• Depreciating the home