The home office deduction is available for self-employed individuals who use a portion of their home regularly and exclusively for business. You can deduct a percentage of your mortgage interest, property taxes, utilities, insurance, and repairs based on the square footage of your office. W-2 employees who work remotely generally cannot claim this deduction after the 2017 tax reform.
Eligibility for the Home Office Deduction
The space must be used regularly and exclusively for business. "Regularly" means ongoing, not occasional. "Exclusively" means the space has no personal use. A spare bedroom used as an office qualifies if it has no bed. A desk in your living room does not qualify because the room is used personally.
Calculating Your Deduction
Use the simplified method ($5 per square foot, up to 300 sq ft, maximum $1,500) or the regular method. The regular method calculates the percentage of your home used for business and applies that percentage to mortgage interest, property taxes, utilities, insurance, repairs, and depreciation.
W-2 Employee Limitations
The Tax Cuts and Jobs Act of 2017 suspended the home office deduction for W-2 employees through 2025. If you are an employee who works from home, you cannot deduct home office expenses even if your employer requires you to work remotely. This rule only applies to employees, not the self-employed.