What Your Home is Like
To the IRS, a home can mean a few things. Of course a house, apartment, or condo. Also a mobile home and even a boat. If you have a shed out back or a separate garage on your property, that works too. Even a studio, greenhouse, or barn. So long as you use it “regularly” and “exclusively” for business purposes. Here’s what doesn’t count: a hotel, motel, or similar entity that is being used in a similar way, even if it is your property.
To qualify for home office tax deductions, you’ll need to meet some additional criteria. You have to use some part of your home exclusively for business and do so on a regular basis. This home also needs to be your “principal place of business” or a place where you perform tasks or duties that you can’t do elsewhere, like management or administrative work. This means you can deduct taxes for a spare room you use frequently as an office. Even if you, let’s say, meet a client for a lunch meeting elsewhere. That is ok, as long as you also use your home regularly.
What Your Business Is
It gets better. What if you use a part of your home for inventory for your small business? If a part of your home is the “sole fixed location” of your business or if you regularly offer daycare services, chances are that you qualify for this tax deduction. Home offices, in these cases, don’t even have to be exclusively used for business. Boo-yah!
But, before you go, there are some additional rules for certain businesses that you need to look out for. Daycare providers, self-employed persons, and farmers need to use special worksheets or forms to claim their deductions. So if that’s you, head to the IRS’s home office deduction page to find out what you need to do.