A Free Home Office Deduction Worksheet to Automate Your Tax Savings

by
Jesus Morales-Grace, EA
Updated 
September 21, 2022
April 27, 2022
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Reviewed by

One of the biggest perks of working for yourself? Getting to write off your housing costs.

These days, plenty of people WFH, but only self-employed get a tax break out of it.

If you're a freelancer, independent contractor, or small business owner who uses your home for business purposes, the home office tax deduction can be huge. It lets you write off part of your rent and related expenses, including:

The only problem: Keeping track of all these write-offs can be a hassle. That's why we created this free home office deduction worksheet. Just hit "Make a copy,” and you'll be able to track all your home office expenses in one place.

Contents

How to use this home office deduction worksheet

We built this worksheet in Google Docs, so you can use it anywhere you want, for free: all you need is an internet connection. But if you'd like to download your copy and use it in Excel, you can do that too. 

Screenshot of Keeper Tax's home office expenses worksheet

The worksheet is split up into three parts:

  • 🧮 Your Business-Use Percentage Calculator
  • 📝 The section for entering your expenses
  • 🏠 Your Home Office Deduction Dashboard

Let's go over how to use each section.

Using the Business-Use Percentage Calculator

This section automatically calculates how much of your home you use for business-related activities. (That's why there's an abacus emoji 🧮) You'll find it in the top right part of the sheet.

Screenshot of the Business-Use Percentage Calculator section of Keeper Tax's home office expenses worksheet

Just enter:

  • 📏 The size of your home in square feet
  •  🖥️ The size of your at-home workstation in square feet

The Calculator will automatically spit out your business-use percentage in the shaded green box.

If you're already solid on the concepts behind the business-use percentage — or if you just want to learn how to use this worksheet — then that's all you really need to know. Feel free to skip to the next section.

Otherwise, keep reading for more information on your business-use percentage, including what it means for "direct" and "indirect" home office expenses.

What does your business-use percentage mean?

When it comes to the home office deduction, your “business-use percentage” is just the portion of your place taken up by your home office.

For example, pretend your apartment is 800 square feet, and your workstation is 80 square feet. That would make your business-use percentage 10%.

What counts as an at-home workstation?

Your workstation is just the part of the house or apartment where you do your freelance or independent contracting work. 

It doesn't need to be an entire room

We use the term "workstation" interchangeably with "home office" because it doesn't have to be a dedicated office room. A desk, rolling chair, and chair mat in your bedroom can absolutely be your workstation. 

It has to be used regularly and exclusively for work

Whatever area you adopt as your workstation, it just has to be used on a regular basis and follow the "exclusive-use rule” — meaning, you only ever use it for work purposes. Your kitchen table, for instance, wouldn’t cut it. 

Why does your business-use percentage matter?

You need your business-use percentage to figure out how much of your home-related purchases you can deduct. To put it another way, you can only deduct the business-use percentage of your home-related expenses.

 For direct home office expenses

Let's backtrack a bit. There are actually two types of home office expenses, direct and indirect. Direct expenses are things exclusively used for working from home, like:

  • 🪑 Home office furniture
  • 🖨️ Desktop computer and accessories
  • ☎️ Office phone
  • 💡 Office light fixture
  • 🖌️ Expenses for painting the office

These things are only used in the office part of your home. You can't benefit from them when you're just hanging out on your couch or in the kitchen.

These direct expenses have a business-use percentage of 100%, so they're 100% tax-deductible. (This worksheet can handle these deductions for you — more on that later!)

For indirect home office expenses

On the flip side, there are also indirect home office expenses — meaning, all the other housing costs you pay for. These can include your rent, utilities, and any repairs that apply to your whole residence (like patching your roof or fixing your plumbing).

You benefit from these indirect expenses any time you're at home, whether you're in your office or not. That's why you can only deduct a certain percentage of them — specifically, your business-use percentage.

Most of your deductible home expenses will probably fall into this indirect category. That's why knowing your business-use percentage is so important.

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Entering your home office expenses

Starting from row 14 and onward, you can enter all your home-related expenses. 

Screenshot showing where you can enter individual home office expenses

There's room to enter:

  • 🗓️ The date you made each payment in Column B
  • 💰 The amount of each payment in Column C
  • ⚡ The type of expense it was (using the dropdown menu) in Column D
  • 👤 The recipient of the payment in Column E

Calculating your deductible amount for each expense

The worksheet will automatically calculate your deductible amount for each purchase in Column F.

Screenshot showing a spreadsheet of home office expenses, with a column featuring deductible amounts per expense circled in pink

If it's a "Direct Expense," 100% of your payment amount will be tax-deductible. If it's an expense in any other category, the sheet will figure out the deductible amount using your business-use percentage.

Dragging down the deductible amount formula

If you have more home office expenses than the examples in the sheet, make sure to drag down the formula in Column F all the way down, to wherever your last expense is.

Screenshot showing a formula being dragged down a column showing deductible amounts for individual home office expenses

Keeping notes on your direct expenses

You'll notice that there's an optional column, Column G, for notes.

You can use this to jot down comments about any of your expenses — say, if your rent was slightly late one month. That said, it's a good idea to use this column for extra details on your direct expenses. If you spent $300 at Ikea, for example, type in "office furniture" so you know what that expense was for.

Screenshot showing a sheet with two cells circled in pink. Both are notes for direct home office expenses

We've tried to make this worksheet as user-friendly as possible. That said, if you don't want to drag down formulas or manually enter a number every time you pay your rent, there is an even easier way.

You can track all your home office expenses using the Keeper Tax app. Our app scans your bank and credit card statements for home-related costs and automatically records them from you.

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It's smart enough to pick up on recurring expenses like your rent payment, whether you're making it through Venmo, a check, or automatic payments through your bank.

Understanding your Home Office Deduction Dashboard

The final section of this worksheet is arguably the most important — it tells you how much you can actually deduct from your taxable income thanks to the home office deduction.

We call this the Home Office Deduction Dashboard. It's at the top left of the sheet, where the home emoji is 🏠

Screenshot showing the Home Office Deduction Dashboard part of Keeper Tax's worksheet

This Dashboard is completely automated: you won't have to enter anything by hand. It'll tell you:

Both these numbers show up automatically, based on what you enter elsewhere in the worksheet. Now you'll know how much you can write off thanks to your home office deduction!

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Another method for calculating your home office deduction

There are actually two methods for calculating your home office deduction.

If you're using this worksheet to track all your home-related purchases, you're probably already set on the actual expenses method. In most cases, this will be your best option in terms of tax savings, but we want to make sure you understand the simplified option as well.

How the simplified home office deduction works

Instead of tracking all your home-related expenses and writing off a portion based on your business-use percentage, the simplified method for home office deductions lets you write off a specific dollar amount for every square foot of our home office.

That amount may change from time to time, but it's currently $5.00 per square foot. The maximum allowed square footage is 300, which means the simplified method caps your home office deduction at $1,500 a year.

Since most self-employed individuals have more than $1,500 in deductible business expenses each year, it's usually better to just track your actual home expenses. 

Hopefully, this free worksheet — and the Keeper Tax app — can take the hassle out of expense tracking.

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Because you deserve the biggest home office deduction possible.

Jesus Morales-Grace, EA

Jesus Morales-Grace, EA

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Jesus Morales is an Enrolled Agent and has 7 years of bookkeeping and tax experience. He enjoys hiking, traveling, and studying tax law.

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