As a freelancer or self-employed individual, you may have heard of the home office deduction. But do you really know what it is and how to take advantage of it? Let’s delve into this topic and see how this deduction can benefit your finances.
The home office deduction allows business owners to deduct a portion of their home expenses that are related to their work. This includes rent or mortgage interest, property taxes, utilities, repairs and maintenance costs, insurance premiums, and even cleaning services. To be eligible for this tax break, your home office must be used exclusively for business purposes and should not double as a personal space.
To calculate your deduction amount, first determine the total square footage of your home office space. Then divide that by the total square footage of your entire living area. For example: if your home office takes up 100 square feet out of a 1,000-square-foot apartment (10%), then you can claim 10% on all relevant bills mentioned above.
Taking advantage of the home office deduction means putting more money in your pocket during tax season. So if you’re working from home full-time or part-time, make sure to keep track of all relevant expenses so that you can get the most out of this valuable tax break!