The short answer
You may qualify if you use part of your home regularly and, generally, exclusively for your business, and that space is your principal place of business or meets another qualifying business-use rule. If you qualify, you can figure the deduction with either the simplified option or the actual-expense method.
This guide is about self-employed and other business use. It does not tell W-2 employees that working remotely creates a federal home office deduction.
The qualifying tests
| Test | What it generally means |
|---|---|
| Regular use | You use the space for business on a continuing basis, not occasionally |
| Exclusive use (generally) | The space is used only for business — with specific exceptions |
| Principal place of business, or another qualifying rule | For example, it is where you conduct your business, or it meets another business-use rule in Publication 587 |
You do not always need a separate room
A common myth is that you must have a whole room set aside. A dedicated, separately identifiable portion of a room can qualify if it meets the requirements. What matters is how the space is used, not whether it has walls and a door.
Exceptions to the exclusive-use rule
Publication 587 describes situations where the exclusive-use requirement does not apply in the usual way, including certain:
- Storage of inventory or product samples
- Daycare use
- Rental use
Each exception has its own conditions — check Publication 587 before relying on one.
Two ways to figure the deduction
| Simplified option | Actual-expense (regular) method | |
|---|---|---|
| How it works | $5 per square foot of qualifying space | Allocate actual home expenses to the business portion |
| Limit | Up to 300 square feet — so at most $1,500 | Depends on your actual expenses and the limits in Publication 587 |
| Home depreciation | None taken for the home office under this method | Can include depreciation of the business portion |
| Later depreciation recapture | None from this method, because no depreciation was claimed through it | Depreciation claimed can matter when you sell |
| Eligibility | Same requirements | Same requirements |
The actual-expense method uses Form 8829 for many self-employed filers. The simplified option does not change who qualifies — it only changes the calculation.
Example
Wei is a self-employed translator. She uses a 150-square-foot area of her living room only for her work, every working day, and it is where she runs her business. Her family does not use that area. Under the simplified option, her calculation is 150 × $5 = $750. If she instead used part of the room as a guest space on weekends, the area would generally fail the exclusive-use test.
The home office deduction is one part of your business deductions. For the full picture, see What can I deduct as a small business owner?