Tax Tips: Should you take the home office deduction?

Taxpayers often wonder if they should be taking the home office deduction, and this issue is problematic for sure. The first question to be answered is whether or not you even qualify for the deduction. The IRS requires that in order for a space to qualify for the deduction, it must regularly used in connection with a business AND it must be used exclusively for that business.

The "regular use test" requires that you use that space regularly throughout the year for the business. This means that you use the desk or office space more than a few times a year for doing things related to your business.

The "exclusive use test" requires that the space you're claiming be used only for business purposes. So if you've got a spare bedroom with your desk in it, the only space that could qualify for the deduction is that in which the desk is occupied, not the entire room. That space with the desk must also be exclusively for the business in order to qualify. If your child does homework at the desk, it does not qualify. If your wife uses the desk for craft projects, it does not qualify. In like manner, if you use your dining room table for both dinner and business paperwork, you can't do a home office deduction for it.

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