There are two basic requirements for the taxpayer's home to qualify as a deduction:
- There must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
- The home must be the taxpayer's principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.
If you work at many job sites and don't have a permanent job site (or one lasting more than a year), and you use your home for your administrative functions (billing, appointments, making calls, etc.) then your home can qualify as your main place of work. See page 3-5 here. https://www.irs.gov/pub/irs-pdf/p587.pdf
Then, you also have to meet the regular and exclusive rules to take the home office deduction.
The program asks you two basic questions, which I"m not repeating here, but will try and explain.
- Percentage of time the office is used for business - This must be 100%. You may only be in that home office for 1 hour a week. But for that one hour you are conducting business, and absolutely nothing else. It's not a gameroom for the kids, a TV room for weekend sports events, or anything else. Business only.
- Percentage of business conducted in the home office - This is commonly less than 100%. but depending on the profession it very well could be 100%. For example, a hair dresser may run their one chair beauty parlor business out of a room in their home. That would be very realistic for them to claim that 100% of their business is run out of that office.
But a self-employed computer consultant (as I am) only spend about 12 hours a week on average in my home office. But for that 12 hours each week, it's strictly business and nothing else. It would be fair to say that so far this year, I've conducted approximately 30-35% of my business in that home office. In there, I do things like billing, posting payments, ordering computers, parts and supplies, paying business debts, and on rare occasion I"ll actually meet with a client or potential client in that home office.