The home office tax deduction allows freelancers, small business owners, telecommuters, and home-based company employees to write off such expenses as the rent or mortgage, real estate taxes, utilities, and home insurance. Although the deduction can be confusing, it could be a sizeable amount, making it worthwhile for taxpayers to determine whether they qualify. Some taxpayers are worried that the deduction will trigger an audit, but CPA Jeff Porter of Porter & Associates says he has “never seen an audit for the sole purpose of an office in the home.” IRS Publication 587, Business Use of Your Home, details the specific requirements; expenses that can be deducted; and how to calculate the deduction, among other important information. The main requirements for eligibility are “Regular and Exclusive Use,” which means the at-home work area is separately identifiable from the rest of the home and not used for any personal activities or purposes; and “Principal Place of Your Business,” which means the taxpayer performs most of his or her work in that space. The regular method for figuring the deduction involves determining the percentage of the home devoted to business activities and calculating the actual expenses of the home office; but the new simplified option allows taxpayers to opt for a standard deduction of $5 per square foot of home office space, up to 300 square feet. | Read More