Home-office deduction

[coumbak]

Hello, 

I started working full-time as a contractor on 1099 earlier this year and have a sole-proprietor registered LLC. It is my only source of income.

I have a home office and do all my work from my home. Is there a limit to the % of my rent or $ amount that I can deduct? Or is it just the calculation of the % of space that I actually use as a home office? 

Thanks, 

Coumba

[sccas]

Hello @coumbak ! So there are two methods to home office deductions.  Once is called the simplified method and the other is percentage of your home used. I love this article from Turbo Tax as it explains it nicely.

https://turbotax.intuit.com/tax-tips/small-business-taxes/the-home-office-deduction/L1RZyYxzv

[rschule1]

Hi There:

Great advice above:

As an add on- Please keep in mind that an office in home deduction requires positive business income. I.E. income exceeding expenses at least to the amount of the home office deduction. If not the home office deduction will not be allowed.

[Karis_F]

Hello @coumbak. If you perform all of your self-employment work from home, you can deduct your home office expenses (including rent) based on the percentage of square footage of your office compared to the total square footage of your home. You can use actual expenses or the simplified square footage calculation. Here is a resource that might be helpful to you:

https://turbotax.intuit.com/tax-tips/small-business-taxes/the-home-office-deduction/L1RZyYxzv

[carolineb]

Hi @coumbak ! 

You are correct in that your actual expenses such as rent and utilities are prorated as a percent of the size of your home office as compared to the square footage of your entire home. You can also opt to use the Simplified Method, which limits the office space to a 300 square foot maximum, at a rate of $5 per square foot for a maximum deduction of $1500.  However, no matter which method you use, in order to claim your home office as a business expense, that space must be dedicated exclusively to regular business use. The TurboTax program will guide you through entering either actual expenses or the simplified method. Here is a helpful link regarding IRS rules on How Small Business Owners Can Deduct Their Home Office From Their Taxes