Yes, per IRS Topic 508 - Business Use of Home "A separate structure that's not attached to your home used exclusively and regularly in connection with your trade or business" qualifies as one of criteria to deduct expenses for business use of the home.
You would record the shed as an asset in TurboTax so it could be depreciated and you could also deduct expenses related to the shed (such as heat, electric taxes, etc.), and expenses related to your woodworking business.
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