Can I take the home office deduction?

Employees working from home can't take the home office deduction. This has been in place since 2018, when the Tax Cuts and Jobs Act was signed into law. Prior to that, employees who worked from home at the convenience of their employer were allowed to deduct home office expenses under the 2% rule.

If you're self-employed, however, housing-related expenses such as mortgage interest, rent, utilities, repairs, and depreciation for the portion of your home or rental that you use to run your business are allowable expenses under the home office deduction.

You may be able to claim the home office deduction if your office is both:

When you enter your home office information in TurboTax, we'll ask some questions to determine if you can claim the deduction and how much the deduction is worth. You’ll need info like the square footage of your residence and the rooms you worked in.

What does "regular and exclusive use" mean?

One requirement for the home office deduction is that you regularly use a part of your home exclusively for conducting business.

Example: Let's say you turned an unused bedroom into your office and installed a computer with its own high-speed connection. You go in there 4–6 days every week for your self-employed job building websites. The room is used strictly for business—contacting prospects and clients, meeting with them, and working on their websites. In this case, your office would meet the regular and exclusive use requirement.

On the other hand, if you or a family member occasionally go into your office so they can watch movies or play games on your computer, your office is no longer being exclusively used for business.

Similarly, if you work out of your office occasionally or sporadically, it wouldn't be used regularly.

What qualifies as "principal place of business"?

One requirement for the home office deduction is that you use a part of your home as your principal place of business. This doesn't necessarily mean that the majority of your business activities need to take place in your home office. What it does mean is that you use your home office regularly and exclusively to administer or manage your business and that substantial administration/managerial activities aren't conducted at any other fixed location.

If you have a regular job in addition to self-employment: The "principal place of business" question refers to your self-employment activities, not your regular job.

Example: Erin just started their consulting business and has designated a spare bedroom as their office, which is used exclusively for business. About 85% of Erin's time is spent outside the home, meeting potential clients in various restaurants and coffee shops. However, they do all scheduling, planning, and bookkeeping from their home office. These administrative and managerial activities qualify their home office as their principal place of business, even though they're spending 85% of their time outside their home office.