For the love of your business

Do I qualify for a home office deduction from the IRS?

Clarifying Questions

Q: I work full-time for an employer, but I also run a part-time side business out of my spare bedroom. Do I qualify for a home office deduction from the IRS?

-Side Hustler

A: Dear Hustler:

The answer depends on a few factors, but provided it’s a legitimate business you’re consistently involved with, it’s likely you can qualify.

To qualify, the space you consider your office must be used “regularly” and “exclusively” as your “principal place of business.” It doesn’t matter the business is only part-time and not your primary source of income.

So if your spare bedroom—or some portion of it, even just as desk and computer—is used exclusively for business, you may qualify. But if your kids often use that computer too, you likely won’t, as that wouldn’t be exclusive.

In terms of “regular” use, even if you only work one day a week there, you can qualify. The key is that you use the space on a consistent—not daily—basis.

And “principal place of business” doesn’t mean all—or even most—of your business activities take place there. A plumber who does most work elsewhere, can qualify if the space is used regularly and exclusively for administrative-type tasks—bookkeeping, scheduling, and invoicing. As long as you use that space—and no other fixed location—to conduct such work, you meet the standard.

While these are the IRS’ primary standards, there are several other factors to consider and special exemptions for certain types of business. Always check with a Creative Business Lawyer® to be certain your home office qualifies and to learn other tax-savings strategies you might’ve missed.

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