Reduce Taxable Income

When you’re a salaried employee, the idea of claiming a home office deduction can look complicated. The IRS has tightened rules, especially after the 2020 tax year, but experienced professionals still find ways to lower their tax bill. Below is a practical, step‑by‑step guide that explains how to stay compliant, keep accurate records, and avoid usual mistakes.

Getting Started

The home office deduction is available only if you allocate a portion of your residence exclusively for business. After the 2020 Tax Cuts and Jobs Act, the deduction is limited to employees who are eligible for the "qualified business use of home" rules. If you are a salaried worker who works from home or alternates between office and home, you can still claim the deduction – but you must adhere to the IRS’s strict guidelines.

1. Verify Eligibility
   

• Exclusive usage: The space must be used primarily for work, not for personal use. Even a small area, like a corner of a bedroom, is eligible if it’s a dedicated work zone.

• Principal place of business: If the employer requires you to work from home to conduct significant business activities (e.g., client meetings, conference calls), the space is more likely to qualify.
• No employer reimbursement: If your employer pays for your home office expenses or reimburses you, you cannot deduct those same expenses.

1. Choose the Right Method
   
   

There are two approved methods for calculating the deduction:

• Simplified Method: 法人 税金対策 問い合わせ Claim a flat rate of $5 per square foot, up to a maximum of 300 square feet. This method is simple to use and requires no detailed record‑keeping.
• Regular Method: Calculate actual expenses based on the percentage of your home devoted to the office. This includes rent or mortgage interest, utilities, insurance, repairs, and depreciation. The regular method can provide a bigger deduction but demands detailed paperwork.

1. Measure Your Workspace Accurately
   
   

Take precise measurements of the area used only for work. For example, if your home office is 12 feet by 10 feet, the total square footage is 120. If you own or rent a home that is 2,000 square feet, the office occupies 6% of your living space. That percentage will be applied to all qualifying expenses under the regular method.

1. Track Expenses Diligently
   
   

• Utility Bills: Keep copies of electricity, heating, cooling, and internet bills. Divide the cost by the total square footage of the house and multiply by the office square footage percentage.

• Rent or Mortgage Interest: If you rent, your landlord can provide a rental statement that includes interest. If you own, use the mortgage interest portion of your 1040‑Schedule A. For homeowners, consider depreciation as part of the deduction.
• Repairs and Maintenance: Document any repairs specific to the office area (e.g., fixing a broken desk or repainting a wall). General home repairs that benefit the entire house are not deductible.
• Office Supplies: Track purchases of desks, chairs, computers, printer ink, and other items that are used exclusively for work. Keep receipts and note the purchase date.

1. Keep a Detailed Log
   
   

Even when using the simplified method, it’s wise to maintain a log that records the date you started using the space for work, the purpose of each use, and any changes to the workspace. For the regular method, a spreadsheet that tracks each expense and the corresponding allocation percentage will make filing the deduction smoother and provide evidence if the IRS ever asks for clarification.

1. Use Tax Software or a Professional
   
   

Most tax‑preparation software now includes a home office deduction feature. If you choose the simplified method, the software will automatically calculate the deduction based on the square footage you enter. For the regular method, you can upload your expense records, and the software will apply the correct percentages. If your situation is complex—such as a rented office space that overlaps with your home or a hybrid work schedule—consulting a CPA can save you time and avoid costly errors.

1. Understand Common Pitfalls
   
   

• Claiming a space that is also used for personal activities (e.g., a home office that doubles as a playroom) disqualifies the deduction.

• Overstating square footage or using a space that isn’t actually used for business can trigger an audit.
• Mixing personal and business expenses without clear segregation will result in a partial or full disallowance.
• Forgetting that the deduction can’t be claimed if the employer reimburses the expense.

1. Plan Ahead for the Future
   
   

• If you’re considering a permanent remote position, keep track of any changes in your work schedule. The IRS may scrutinize employees who suddenly start using a home office without a prior history of remote work.

• Stay updated on tax law changes. The IRS occasionally revises the rules for home office deductions, especially with evolving work‑from‑home trends.
• Store all receipts and documentation for at least three years, as the IRS has a three‑year statute of limitations for assessing adjustments.

Key Takeaways

• Only use a space that is only for work and is your principal place of business.
• Decide between the simplified and regular methods based on which yields the greater deduction and matches your record‑keeping comfort level.
• Keep meticulous records—measurements, receipts, logs—to support your claim.
• If you’re uncertain or your situation is unusual, seek professional advice.

By following these strategies, salaried workers can confidently claim home office deductions, reduce their taxable income, and keep their finances in order while working from home.