Business Use of Home Worksheet

The business use of home, often called the home office deduction, is an important tax consideration for those who use a portion of their home for business purposes. This deduction allows individuals to account for the costs of maintaining a home office, which can significantly reduce their taxable liability.

Key Factors For Having A Home Office:

• Cost Efficiency: A home office can save on overhead costs associated with renting or buying a separate business space.
• Convenience: It provides the convenience of working from home, which can lead to increased productivity and flexibility.
• Tax Benefits: The home office deduction can lower tax liability by allowing deductions for a portion of expenses that would otherwise be personal and non-deductible.

Some Key Deductions Include:

• Mortgage Interest: A percentage of mortgage interest can be deducted based on the proportion of the home used for business.
• Rent: A percentage of mortgage interest can be deducted based on the proportion of the home used for business.
• Utilities: Costs for utilities like electricity, water, and internet service can be partially deducted.
• Insurance: A portion of homeowner’s or renter’s insurance premiums may be deductible.
• Repairs and Maintenance: Expenses for repairs and maintenance that benefit the entire home, including the business area, can be deducted based on the business-use percentage.
• Depreciation: Depreciation on the home can be taken for the portion used for business, reflecting the wear and tear on that part of the property.

To qualify for these deductions, the space must be used for business and should be the principal place of business.

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