Calculate the difference in savings from the simplified home office deduction method or the actual expenses method.
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Calculated at $5 per square foot of your office, up to 300 sq ft. Simple to calculate and requires no recordkeeping of actual expenses. Maximum possible deduction is $1,500.
The percent of your home that is occupied by your office. This is the percent of your actual expenses that you can deduct.
The total deduction if you track and claim your real home expenses, allocated by your business-use percentage. This method requires more recordkeeping but often yields a larger deduction.
The home office deduction lets self-employed people who work from home write off a portion of their housing costs on their taxes. If you're a freelancer, independent contractor, or small business owner who uses part of your home for business, you can deduct a share of expenses like rent, utilities, home insurance, and maintenance. But there's a catch! W-2 employees aren't eligible, even if they work from home full time! The home office deduction is a business deduction, so you can only write it off on your taxes if you're considered self-employed.
To claim the home office deduction, your workspace has to pass two tests:
Your workspace doesn't need to be a separate room. A dedicated desk and chair in a corner of your bedroom is fine, as long as it's reserved for business.
There are two ways to calculate the deduction, and you can switch between them from year to year (but not within the same tax year).
With the simplified method, multiply the square footage of your home office by $5 per square foot, up to a maximum of 300 square feet. That caps the deduction at $1,500 a year, and you claim it on line 30 of Schedule C. It's quick, but it doesn't account for your actual housing costs, and you can't separately deduct depreciation.
With this method, just add up your actual home expenses, then multiply it by your business-use percentage: the share of your home taken up by your office. (An 80 sq ft office in an 800 sq ft apartment = 10%.) You report this on Form 8829. One thing to consider is that expenses fall into two buckets:
Two bonuses the simplified method doesn't offer: you can carry over any unused deduction to a future year, and you can deduct home depreciation. For a deeper comparison, see our guide on whether to use the simplified home office deduction.
From thousands of Keeper users, we typically see the actual expenses method ends up saving you more in taxes. Let's see a couple scenarios:
Even the rural homeowner who maxes out the simplified cap still comes out ahead with actual expenses. The simplified method has a hard $1,500 ceiling; the regular method doesn't. Thedownside of actual method recordkeeping — but apps like Keeper automate it by scanning your accounts for home-related expenses, so it's no longer the hassle it used to be. You can also track everything by hand with our free home office deduction worksheet.
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No. It's a business deduction, so it requires self-employment income. If you only have W-2 wages, you can't claim it — even if you work from home.
No. It just has to be a clearly defined space used regularly and exclusively for work. A dedicated desk area qualifies.
$5 per square foot of office space, up to 300 square feet, for a maximum deduction of $1,500.
No. Your deduction can't exceed your gross self-employment income. With the actual expenses method, any unused amount carries over to future years; with the simplified method, it's lost.
For most self-employed people, the actual expenses method produces a larger deduction. Use the calculator above to compare both for your situation.
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