When is Working from Home a Tax Deduction?

When is Working from Home a Tax Deduction?

When is Working from Home a Tax Deduction?

The most recent changes to the tax laws stipulate that the home office deduction is no longer available for employees.

If you are self-employed or an independent contractor, you might qualify for the deduction if you can pass two tests:

  1. Regular and exclusive use: You must regularly use part of your home exclusively for your business.
  2. Principal place of your business: You must be able to show that you use your home as your principal place of business. If you have another location and you ALSO use your home to substantially and regularly conduct business, i.e. meet with clients, it may be deductible. If you have a separate free-standing structure that is used exclusively and regularly for your business, it does not need to be your principal place of business.

If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.

Examples: You have an office where you meet your clients for appointments, but you also use your home office to do admin work. Use of your home office would be considered only “appropriate and helpful” and, as a result, not be tax deductible.

TL;DR: If you pass the two tests, you should take the deduction – though it is hard to pass the tests if you are renting another office space.

P.S. Want to learn how to manage your money better as a therapist? Now you can learn directly from Toni Cameron, CPA with our new on-demand webinars! Check out our most popular webinars here.
Khaled - TLDR

Khaled Albadawi, CPA

Principal & CEO

Khaled joined TL;DR as Principal in December of 2022, and has quickly hit the ground running offering a fresh new perspective for the TL;DR team and clients. He’s a natural entrepreneur & leader, starting his days at 4 AM with a nice cup of coffee to get a jumpstart on projects before the business world wakes up. His one piece of advice to business owners? Ask yourself if you are creating just another job or a business. Ideally, you should be building something that doesn’t require you to be there 40 hours a week!

you may also like:

Vector 3 (2) (1)

ready to work with us?

You can schedule your introductory chat: 

© Copyright TL;DR: Accounting 2022