Home Office Deduction Calculator
Two ways to claim the room you work in. Put in the square footage and your housing costs; we'll show which method leaves more money with you.
| Simplified method150 ft² × $5 (max 300 ft²) | $750 |
| Regular method12.5% of $27,900 | $3,488 |
REGULAR METHOD WINS
Homeowners using the regular method also deduct depreciation on the office share of the building, which this estimate leaves out and which is recaptured when you sell.
Which method should you pick?
The simplified method is quick and safe but tops out at $1,500. The regular method usually wins for renters in high-cost cities and for anyone whose office is a large share of a small home. You can switch methods from year to year. The rules come from IRS Publication 587, Business Use of Your Home.
Questions freelancers ask
How is the simplified home office deduction calculated?
$5 per square foot of space used regularly and exclusively for business, up to 300 square feet, for a maximum of $1,500. No depreciation, no Form 8829, and nothing to recapture when you sell the home.
How does the regular (actual expense) method work?
Divide your office area by your home's total area to get the business-use percentage, then apply it to rent or mortgage interest, property tax, insurance, utilities, repairs and depreciation. You file Form 8829 and the deduction can be much larger than $1,500 in expensive housing.
Who qualifies for the home office deduction?
Self-employed people who use part of the home regularly and exclusively as their principal place of business. W-2 employees cannot claim it on their federal return. A spare bedroom that doubles as a guest room does not meet the exclusive-use test.
Can the home office deduction create a loss?
No. It is limited to your business's gross income minus other expenses. Under the regular method, any disallowed amount carries forward to the next year; under the simplified method, it does not.