Home Office Deduction

If you operate your business from your residence, you may be eligible for a tax deduction. The IRS' definition of a "residence" also includes a barn, greenhouse or an unattached garage.

The business use of your property must be exclusive, regular and for your business. Exclusive use means your work area is just that….your work area. A computer station in your living may qualify, but using your dining room table as a "conference room" will probably not qualify. Regular use means usage on a continuing basis. Even if your spare bedroom has been converted to office space, occasional business use won’t qualify for the deduction.

The part of your residence used for business must also serve as your principle place of business, or a place where you meet with clients or customers. If your business has several locations, you may qualify for the deduction if you can prove that your home is used regularly for administrative or management tasks that you are unable to perform at another fixed location. Meeting clients at your home must be necessary and integral to your business; occasional meetings or customer calls does not qualify for the deduction.

There are several myths concerning the home office deduction, so do some research before filing your taxes. IRS Publication 587 is devoted to business usage of a residence.

Visit these websites for more information on home office deductions and home-based tax avoidance schemes.