Should I Use The Simplified Home Office Deduction?

If you work from home, you get a big break on your taxes. The IRS offers two ways to claim this write off -- the simplified method, and the regular expenses method. You can pick one or the other, but not both.

Option 1: Simplified method - you get $5 per square foot of your home office, up to $1,500.

Option 2: Regular method - you take a portion of all home-related expenses.

So... which method saves me more money on taxes?

Before we get into explaining all of that, be sure to try our home business expense tracker to help you organize all of your write-offs. Here's some examples to show you how the methods work.

Case 1: Urban renters...

Let’s say you rent a 1 bedroom apartment in an urban environment. On average, that means you’re paying $800 per month for rent. On top of that, you’ve got to pay for wifi, renter’s insurance, and all of your utilities which adds up to at least $150 per month. In this case, you definitely shouldn’t take the simplified home office deduction:


Urban renter


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Case 2: Suburb homeowners…

Let’s say you own a 1 bedroom home in a suburban environment. Your home is worth $200,000 and of course you’re paying for wifi, renter’s insurance, and all of your utilities which is at least $150 per month. Turns out, you still shouldn’t take use simplified method:


suburban owner


Case 3: Rural homeowners…

Okay, now let’s say you own a home further from all the bustle. The home is less expensive and you’ve got lots of room and a separate 300 square foot room for your home office. Now, it starts to make more sense to use the simplified method. But still, not quite…


Rural Owner


Bottom line: Claiming home-related expenses is almost certainly better than using the simplified method (and Keeper does it for you!)




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Note: at Keeper Tax, we're on a mission to help freelancers overcome the complexity of their taxes. That sometimes leads us to generalize tax advice. Please reach out via email if you have questions.

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