Can I Claim Home Office Deduction as a Business Expense in United States?
Yes, US self-employed people can claim the home office deduction using either the simplified method ($5/sq ft up to 300 sq ft = $1,500 max) or the regular method (actual expenses × business-use percentage). W-2 employees cannot claim it while the suspension of miscellaneous itemized deductions applies.
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What Internal Revenue Service (IRS) says
IRS Section 280A allows a home office deduction if the space is used regularly and exclusively for business. Simplified method (Rev. Proc. 2013-13): $5 per square foot up to 300 sq ft. Regular method: actual costs (utilities, insurance, depreciation, mortgage interest or rent) × business %. Two tests must be met. The space must be used regularly and exclusively for business, and it must be the principal place of business. Meeting clients at home, or using a separate structure such as a studio or garage, can also qualify. Use that is merely appropriate and helpful for the business is not enough. Homeowners and renters can both claim, and the regular method is reported on Form 8829 for Schedule C filers.
When you can claim
- Self-employed (Schedule C) using a dedicated home office area regularly and exclusively
- S-corp owner-employee under an Accountable Plan reimbursement
- Single-member LLC owner taking the deduction on Schedule C
- Storage of inventory or product samples (separate test, no exclusivity required)
- Renters, who deduct the business share of rent under the regular method
- A separate garage or studio used only for the business
When you cannot claim
- W-2 employees (the suspension of unreimbursed employee expenses still applies)
- Space used for both business and personal purposes (fails exclusivity test)
- Hotel or temporary space
- Home office used only occasionally
- A dining table or spare bedroom that also serves as a guest room
- Expenses beyond the net income of the business from that activity: the excess is carried forward under the regular method
Good to know
Pro tip: S-corp owner-employees should use an Accountable Plan to reimburse home office expenses tax-free from the corporation, rather than try to deduct on Schedule A (which doesn't work post-TCJA).
Important: The deduction cannot create or increase a loss: it is limited to the net income of the business use. Depreciation claimed on the home office is recaptured as taxable gain when the home is sold, even if the main home gain exclusion applies, so many owners take the simplified method to avoid it. IRS Publication 587 is the full guide.
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