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Home office deduction - is it worth it?

I have been self-employed part-time and have already been able to claim the percentage of use of my phone and internet bills, in addition to mileage.  I have converted my work area into a home office, but I'm wondering if it's even worth it.  I can't use my computer at all now for anything personal and am not sure if I would be able to deduct much in addition to justify keeping it as a home office.  It's only about 30 square feet.  How much does this usually add up to on average in savings?  

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2 Replies
TomK2023
Expert Alumni

Home office deduction - is it worth it?

Using the Simplified Option: The maximum allowable square footage of home use for business (not to exceed 300 square feet).  Standard $5 per square foot used to determine home business deduction.  Thus, the maximum deduction is: 300 x  $5 = $1,500.

 

Since your office space is 30 sq. ft. X $5 = $150

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Home office deduction - is it worth it?

With a Home Office, you can deduct a potion of your rent or mortgage interedt. You can also deduct any direct improvments to the area or a percentage of indirect costs.  If you paint the entire house and your office is 10% of your total square footage, you can deduct 10% of the costs.

 

You have two options for calculating your expenses. However, you may be right in that you are getting deductions for your equipment already.  Alos, if you do end up depreciating a portion of the house, you will have tio recapture the depreciation taken upon the sale.

 

  • Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction:
    • The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.
    • When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.
  • https://www.irs.gov/newsroom/how-small-business-owners-can-deduct-their-home-office-from-their-taxes....
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