The home-office deduction has a reputation as an audit trigger, but it is a legitimate deduction when the space is used regularly and exclusively for business. A corner of a shared living room does not qualify; a dedicated office, even a small one, does.
You can calculate it two ways. The simplified method gives you $5 per square foot of office space, up to 300 square feet — fast, but often smaller. The regular method prorates your actual home expenses (mortgage interest or rent, utilities, insurance, depreciation) by the percentage of your home the office occupies, which usually produces a bigger deduction if you keep good records.
The records that matter: a floor plan or measurement showing the office square footage, a full year of the underlying bills you are prorating, and photos of the space as it is actually used. We calculate both methods for every self-employed client and file whichever nets the better result.
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