Step 3 of 5 — Claim home office deduction
Calculate your home office deduction using simplified or actual method.
$5 × 150sqft (max 300 sqft)
10.0% of home expenses
Recommended: Actual Method
Saves $1,506 more per year
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Next Step: Employee vs. contractor
Simplified: $5 × sqft (max 300 = $1,500)
Actual: (Office ÷ Total Home) × Annual Home Expenses
Self-employed individuals and business owners. W2 employees cannot deduct home office since 2018 (TCJA). You must use the space exclusively and regularly for business.
$5 per square foot of dedicated office space, max 300 sq ft = max $1,500 deduction. Simple but often less than regular method.
Deduct actual percentage of home expenses (mortgage interest, rent, utilities, insurance). Office % = office sq ft ÷ total home sq ft.
At 25% tax rate, a $5,000 deduction saves $1,250. At 30% (including SE tax): saves $1,500. The regular method often yields $3,000-8,000 deductions.
Yes — renters can use the regular method to deduct a percentage of rent, utilities, and renter's insurance based on office square footage percentage.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.