Some people believe that home office deductions are akin to begging the IRS to audit your taxes. While this can be true in some situations, home office tax deductions, if done properly, are completely legal and can provide a big payoff.
So if you work from home, consider the following tips. Home office tax deduction rules are a bit tricky, but with a little forethought and attention to detail, you should be just fine.
Home office deductions are attached to the percentage of your home that is used for business purposes. Therefore, the first thing you need to do is figure out, with respect to square footage, the percentage of your home designated as an office.
To take the initial tax deduction, the IRS requires that you use the space exclusively and regularly as either (a) your principal place of business; (b) a place to meet with clients; or (c) if the office is a separate structure, in connection with your business.