Home Office Deduction Calculator

Only self-employed taxpayers, independent contractors, and certain statutory employees can claim home office deductions post-TCJA (2018-2025). W-2 employees cannot - the unreimbursed employee expense deduction was eliminated. The space must be used regularly AND exclusively for business, and either be your principal place of business or a place where you meet clients.

The simplified method ($5/sq ft up to 300 sq ft, max $1,500) is easier, requires no Form 8829, and skips depreciation recapture. The actual method (business % × eligible expenses) often produces a larger deduction for homeowners with high mortgage interest, property tax, utilities, or repairs. Rule of thumb: actual usually wins if your home office is more than 5% of total square footage and you have significant home costs.

If you use the actual method, you must depreciate the business portion of your home over 39 years. When you sell the home, the IRS recaptures that depreciation as taxable income at a maximum 25% rate - even if you exclude the primary-residence gain. The simplified method avoids this entirely. Many CPAs recommend simplified for homeowners planning to sell within 10 years.

Under the actual method, yes - utilities (electric, gas, water, trash) are pro-rated by business use percentage. Internet is partly deductible if used for business (business % of total). 100% business-use phone lines are fully deductible. Personal cell phones used partly for business are pro-rated by usage percentage.