Small business owners who work from their homes can claim a tax deduction for business use of the home, on Form 8829. To complete Form 8829, you will need to gather some paperwork for the calculation.
Complete Form 8829 Yourself
You may be able to use the simplified method for calculating your home space deduction. If you have a small space (300 square feet or less), you can do a simple calculation to get the amount of the deduction. The calculation is currently $5 a square foot times the square foot area, up to 300 square feet.
Information for Percentage Use of Home Calculation
To calculate the percentage use, you will need to know:
- The total square footage of your home
- The total square footage of the area or areas you use for business purposes
Use these areas to get a percentage of home use. You will be using this percentage for expenses below.
Home Expenses for Calculation
You will need to gather documents to substantiate your home business expenses for the year:
- Mortgage interest
- Property taxes
- Documents to substantiate any casualty losses
- Homeowner’s insurance costs
- Home rent expenses
- Expenses for repairs and maintenance
- Utilities, including water/sewer, electricity, gas, trash
- Other home expenses, like Internet service
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