Yes! The home office tax deduction is designed for the self-employed. It may be simplest to use the safe harbor methods, where you multiply the qualifyiing square footage by $5, for a maximum deduction of $1,500. You can learn more about it on the IRS website. Keep in mind that there are pretty strict rules associated with what qualifies as home office space, so read up on the rules and make sure you're not in violation - IRS loves to audit this deduction!
The simple answer to your question is yes, the self-employed individual may in fact take a deduction for the use of a home office. The key to this deduction is to recognize that you're entitled to take this deduction for the space in your home used exclusively as an office. As an example, my office is roughly 700 ft.² of the total of 2800 ft.². In this example, I can take a deduction for 25% of the space and this may include 25% of all the utilities associated with the house in its entirety. If in fact you do this, be sure that you do a proration with things such as real estate taxes and utilities. Again using this example, 25% of the real estate taxes will be shown on my schedule C and the remaining 75% will be deductible under my itemized deductions on the federal form 1040. It gets a little more difficult if the office is part of a bigger room but again, the best you can do is to make conservative estimates and run with the ball. One thing to keep in mind that most people forget under the category, I call "selective memory"is that when you go to sell the house on the assumptions you're also taking a depreciation deduction, the depreciation deduction will come back in the form of taxable income in the year the sale and will not be eligible to be excluded under the $250,000 capital gain exclusion available to individuals and $500,000 capital gain exclusion available to couples. If instead, you hold the home until death, all this recapture of taxable income is forgiven. This of course is no reason to die early. As with everything related to taxes, get some good qualified advice from a tax professional or a fee-only financial advisor who deals with closely held businesses. Good Luck
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