You will need the SE Edition to file the income from your SE income. Claiming a home office helps considerable as it reduces the amount of Social Security and Medicare taxes you pay on that income. There are rules to claiming the office. You will have to pro-rate business vs employee use if you also claim it for your W-2 income.
Do you qualify for the home office deduction?
Whether you're
self-employed or an employee, 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 means is
that you use your home office regularly
and exclusively to administer or manage your business, and that
substantial administration or management activities for your business are not
conducted at any other fixed location.
Here's an example:
Larry just started a new consulting business, and has set aside a spare bedroom
as his office which he only uses for business purposes. Currently about 85% of
his time is spent outside the home, meeting potential clients in various restaurants
and coffee shops. However, he does all his scheduling, planning, bookkeeping,
etc. from his home office. These administrative and managerial activities
qualify his home office as his principal place of business, even though he's
spending the majority of his time outside of his home office.
If you can carve out
a little nook in your home that you can dedicate solely to your business
affairs, you’re setting yourself up for a great home office tax deduction. It
does not have to be a separate room, as a desk in the corner of the kitchen
will qualify. But it does have to be used exclusively for business tasks, so
the kitchen table probably does not qualify.
