More In Forms and Instructions Use Schedule A (Form 1040 or 1040-SR) to figure your itemized deductions. In most cases, your federal income tax will be less if you take the larger of your itemized deductions or your standard deduction.

What is the simplified method for home office?

The simplified method, as announced in Revenue Procedure 2013-13 PDF, is an easier way than the method provided in the Internal Revenue Code (the “standard method”) to determine the amount of expenses you can deduct for a qualified business use of a home.

How do you calculate gross income limitations?

Now you subtract expenses related to your business activity from your business’s gross income. This can include a second phone line, office supplies, and depreciation on equipment. You can subtract 100% of these expenses. This will give you your deduction limit.

What is the maximum home office deduction?

Instead of keeping records of all of your expenses, you can deduct $5 per square foot of your home office, up to 300 square feet, for a maximum deduction of $1,500. As long as your home office qualifies, you can take this tax break without having to keep records of the specific expenses.

What is the standard home office deduction?

$5 per square foot
Standard deduction of $5 per square foot of home used for business (maximum 300 square feet). Allowable home-related itemized deductions claimed in full on Schedule A. (For example: Mortgage interest, real estate taxes).

What’s the maximum deduction for home office?

Can you use the simplified method for a taxable year?

A. No. You cannot use the simplified method for a taxable year and deduct actual expenses related to the qualified business use of the home. The amount allowed as a deduction when using the simplified method is in lieu of a deduction for your actual expenses.

When to use simplified or regular tax deductions?

You may choose to use either the simplified method or the regular method for any taxable year. You choose a method by using that method on your timely filed, original federal income tax return for the taxable year. Once you have chosen a method for a taxable year, you cannot later change to the other method for that same year.

How to calculate your total allowable business expenses?

Whichever you choose to do, you’ll need to add up all your expenses, use simplified expenses (if appropriate to you) and keep all the receipts on file for 6 years. Simplified expenses lets you claim for certain expenses using a flat rate, rather than giving you the hassle of saving your receipts or doing complicated calculations.

How to calculate your home office tax deduction?

If you opt for the general method using Form 8829, Expenses for Business Use of Home, the first task is to calculate the percentage of business use. To do this, you divide the square footage of your office space by the total square footage of the home.