Home Office Expense

Written By
Paul Tracy
Updated November 4, 2020

What is a Home Office Expense?

Home office expenses are those costs incurred by working from a home-based office.  These expenses are tax-deductible.

How Does a Home Office Expense Work?

In order to qualify as fully tax-deductible, home office expenses must go toward the consumption of utilities or the purchase and use of goods (e.g. fax machines, computers, and special equipment) exclusively for business operations. An individual may claim home office expenses provided that at least 50% of his work time is conducted from the home office.

To illustrate, suppose your job permits you to work three out of five work days per week from your home office. Since you are working 24 hours out of 40 hours of work a week from your home office, you can deduct associated home office expenses from your taxes.

Why Does a Home Office Expense Matter?

Advances in network security and information technology have enabled entrepreneurs, as well as many company employees, to work from home. In addition to the work/life benefits provided by working from home, home office expenses reduce tax rates, since it allows the discount of costs associated with business activities carried out in the home. 

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