LedgerLinx Home Office Deduction: Eligibility and How to Claim It
January 20, 2026
Who Qualifies?
The home office deduction is available to self-employed individuals (sole proprietors, independent contractors, freelancers) who use a portion of their home regularly and exclusively for business. This includes Schedule C filers and certain gig economy workers.
Important: W-2 employees are not eligible for the home office deduction under current federal tax law (since the 2017 Tax Cuts and Jobs Act).
Requirements
To claim the deduction, your home office must meet two tests:
- Regular and exclusive use: The space must be used regularly for business and not for personal activities
- Principal place of business: The office must be your main place of business, or a place where you regularly meet clients
A dedicated room works best, but a clearly defined portion of a room can also qualify.
Two Calculation Methods
Simplified Method
- Deduct $5 per square foot of your home office
- Maximum of 300 square feet ($1,500 maximum deduction)
- No need to track individual home expenses
- Cannot carry over unused deduction
Regular Method (Form 8829)
Calculate the business percentage of your home based on square footage, then apply it to actual home expenses:
- Mortgage interest or rent
- Property taxes
- Utilities (electricity, gas, water, internet)
- Homeowner’s insurance
- Repairs and maintenance
- Depreciation (for homeowners)
Example: If your home office is 200 sq ft and your home is 2,000 sq ft, your business percentage is 10%. If your total eligible expenses are $20,000, your deduction is $2,000.
What Expenses Are Deductible?
| Expense Type | Regular Method | Simplified Method |
|---|---|---|
| Mortgage interest / Rent | Proportional | Included in $5/sq ft |
| Utilities | Proportional | Included |
| Insurance | Proportional | Included |
| Repairs (office only) | 100% | Not separate |
| Repairs (whole home) | Proportional | Included |
| Depreciation | Proportional | Not applicable |
Tips for Documentation
- Take photos of your home office space
- Keep a floor plan showing the dedicated area
- Maintain records of all home expenses
- Track the percentage of time used for business vs. personal
The home office deduction can be a significant tax benefit for self-employed individuals. Choose the method that gives you the larger deduction.