Home Office Deduction: Simplified vs. Regular Method

The space must be used regularly and exclusively for business, and it generally must be your principal place of business or a place where you regularly meet clients. A desk in the corner of a guest room you only use for work can qualify; a kitchen table you also eat at usually does not. W-2 employees working from home currently cannot take this deduction on their federal return.

The simplified method multiplies your office square footage by a fixed IRS rate per square foot, up to a maximum number of square feet. There is no need to track utilities, insurance, or depreciation, and there is no depreciation recapture when you sell your home. The trade-off is that the deduction is capped and often smaller than what the regular method would give you.

The regular method takes your office's share of your home, usually by square footage, and applies it to actual expenses.

Renters in high-cost areas and owners with large homes and high expenses often do better with the regular method. People with a small office or modest housing costs frequently find the simplified method close enough to not be worth the extra record-keeping. Owners should factor in that depreciation taken under the regular method can be recaptured and taxed when the home is sold.

You can switch methods from year to year, so there is no need to lock in. Entering your square footage and annual housing costs into a home office deduction calculator shows both results so you can take the larger one.