Home Office Deduction Calculator

The simplified method allows you to deduct $5 per square foot of your home office, up to a maximum of 300 square feet. That's a maximum deduction of $1,500 per year, and never more than your business's gross income limitation: its gross income less the business expenses that aren't for the home (IRC §280A(c)(5)). No need to track actual expenses or calculate depreciation — just measure your office space.

The regular method is usually better if your actual home expenses are high (expensive rent or mortgage, high utilities) or your office takes up a large percentage of your home. The simplified method is better for smaller offices in modest homes, and it avoids the complexity of tracking expenses and depreciation recapture when you sell. You can switch methods each year.

No. Under current federal law (the Tax Cuts and Jobs Act), W-2 employees cannot deduct home office expenses, even if they work from home full-time. This deduction is only available to self-employed individuals, freelancers, and independent contractors who file Schedule C, to farmers who file Schedule F, and to partners with unreimbursed partnership expenses. Some states (like New York) allow a state-level deduction for employees.

To claim the home office deduction, the space must be used regularly and exclusively for business. A desk in a corner of your bedroom can qualify if that area is used only for work. A kitchen table you also eat dinner at does not qualify. The space must also be your principal place of business or a place where you regularly meet clients.

The regular method lets you deduct the business-use percentage of: mortgage interest or rent, property taxes, utilities (electric, gas, water, internet), homeowner's or renter's insurance, repairs and maintenance, and depreciation (for owned homes). Only the portion attributable to your office space is deductible.

If you use the regular method and claim depreciation on your home office, the IRS requires you to 'recapture' that depreciation when you sell your home. The depreciation amount is taxed at up to 25% as unrecaptured Section 1250 gain, even if the rest of your home sale is tax-free under the $250K/$500K exclusion. The simplified method avoids this entirely.