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I’M NOT ABOUT to accuse anyone of “cheating” on their taxes, but I am comfortable in claiming that too many people don’t get the deductions they deserve and end up paying the IRS way too much at tax time because they’re unsure of their rights and legal privileges as home-based business owners or people who sometimes work at home (yes, you might qualify as well!).
  1. Is part of your home used in connection with a trade or business? If not, sorry, you don’t qualify for a deduction. However, if so, go to number 2!
  2. Are you the business owner or an employee? If not, and the use of your home isn’t regular and exclusive, I’m afraid you don’t qualify for a deduction. If you are the business owner or employee, or if you’re neither (such as a consultant), and the use of your home for work is regular and exclusive, you may still qualify and should continue to number 3!
  3. Do you work at home for the convenience of your employer? If not, sorry, you’re no longer in the running for a deduction. However, if you do, continue to number 4!
  4. Do you rent the part of your home used for business to your employer? If so, sorry, you don’t qualify for a deduction. However, if you don’t rent the part of your home used for business to your employer, you may still qualify for a deduction. If you don’t rent the part of your home used for business to your employer, but the use of your home isn’t regular or exclusive, I’m afraid that you don’t qualify for a deduction. However, if you don’t rent the part of your home used for business to your employer and you do use your home for work regularly and exclusively, you may still qualify for a deduction and should continue down to number 5!
  5. Is your home your principal place of business? If you’ve gotten to this point and you answered ‘yes’ to this question, congratulations! You qualify for the deduction! If you made it to this point, but answered ‘no’ to this question, don’t lose hope; you may still qualify. If you answered ‘no’ to this question, move down to question 6.
  6. Do you meet patients, clients, or customers in your home? If you answered ‘yes’ to this question, congratulations! You qualify for the deduction! If you made it to this point, but answered ‘no’ to this question, don’t lose hope; you may still qualify. If you answered ‘no’ to this question, move down to question 7.
  7. Is your home office in a separate structure, such as an unattached garage or mother-in-law suite? If your home office is not in a separate structure from the rest of your home, I’m sorry, you do not qualify for the deduction. However, if your home office is in a separate structure, congratulations! You qualify for a deduction!
 
I hope I was able to save some of you some money through this brief education of what qualifies for a home office tax deduction. IRS Publication #587 has all of the facts. Download it from their site here.