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Can I take the home office deduction if I’m self-employed?

Most people who are eligible for the home office deduction are self-employed. However, not all self-employed people may claim this deduction.

Claiming the home office deduction can increase your likelihood of being audited by the IRS. In today’s post, we examine the criteria for this deduction.

Am I really self-employed?

Most self-employed people either own their own business or else work independently – as freelancers, contractors or consultants. Typically, if you’re self-employed, you’ll receive a 1099-MISC or a 1099-K. If you receive a W-2, you’re considered an employee – not self-employed.

Deduction criteria

To claim the home office deduction, you must use an area in your home regularly and exclusively to business use – it can’t double as a guest bedroom, for example. In addition, one of the following must also be true:

  • It is your principal place of business including administrative use – which can simply mean that nearly all of your work is done there. It can also mean that you do your most important work there – i.e., the work that earns you the most income. If you work in several locations, then it means that your home office is where you spend more than half of your working time.
  • It is a place to meet with clients in the normal course of business.
  • It is in connection with the business as a separate structure not attached to the taxpayer’s personal residence.

For more tips on what you can and can’t claim as a tax break, as well as common self-employment tax mistakes, it’s worth consulting with an experienced tax attorney for advice.