If you’re self-employed and work from home, you may be able to deduct home office expenses on your 2021 return.

Use the method that provides the biggest tax deduction.  You don’t have to rely on the traditional method based on square footage if an alternative method is “reasonable.”  One method that’s been allowed by the IRS in the past is to claim a business percentage based on the number of rooms in the home as long as the room sizes are comparable.  To qualify for home office deductions, you must use the office regularly as your principal place of business or a place where you meet or deal with customers, clients or patients in the normal course of business. Under the current rules, home office deductions aren’t allowed if you’re an employee, even if you legitimately work all the time from home.  If you qualify, you can write off direct expenses plus a proportionate share of indirect expenses like mortgage interest, property taxes, utilities and insurance.  Also, you can claim a depreciation deduction for the part of the home used as an office.  Typically, the percentage entered on Line 3, Form 8829, Expenses for Business Use of the Home, reflects the square feet of the home divided by the square feet of the portion used for business, as referenced in the IRS instructions for Form 8829. But the “rooms method” may increase your deduction.

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