Can i file home office deductions for both W2 and K1 business income earned using the same office?

[joshuawrightelli]

I have a full time job (W2 income) and work almost exclusively from home (i reside in new york but my job is in illinois, even though i spend little time there). I also started an LLC in 2015 and received K-1 income from this. I have no office for this business and so work exclusively from home. I only have 1 home office that i use for both the W2 job and the business. How do i declare a home office expense for both? can i?

[resocal]

The first thing you must do is estimate the amount of time that you spend in the office for the various uses, i.e., spent on K-1 business, LLC business and rentals or whatever applies. Then separate the square footage used based on the percentage of total for each business. For example you use the office 56% for K-1 and 44% for the LLC or whatever applies. Then this expense has to be listed on the Schedule C for each business. That means that information must be listed separately for each business.  If any major modifications are made for the office, this must be added to the cost that you are using to write off the square footage. (First compute the cost of the room based on the square footage of the office space as a percentage of the square footage of the entire home, and then add the modifications that that number. You MUST keep tract of all your computations that you make for square footage, usage, etc because when you are audited you will need to furnish this information to the IRS. As a general rule, if you deduct a home office your chances of being audited increases dramatically. If you need the deduction then compute it and use it. But if you don't or it makes a little difference then don't bother using the home office deduction.

[davidsf44444]

If you’re self-employed and work from home, you may be able to claim the home office deduction to help lower your federal income tax bill. But if you’re an employee who works at home, tax reform may have put a wrinkle in your dreams of a home office tax deduction.

While tax reform didn’t directly change the home office deduction, it did temporarily suspend miscellaneous itemized deductions that were claimed on Schedule A. And among those suspended items were unreimbursed employee expenses, including the home office deduction.

That means if you work from home as an employee for someone else, you can’t take the home office deduction for tax years between Jan. 1, 2018, and Dec. 31, 2025.

But if you’re self-employed (a small-business owner, freelancer or rideshare driver, for example) you may still be able to claim the deduction. But you’ll have to meet qualifying criteria.