DO:

1. Exclusive and Regular Use

   -DO ensure that the part of your home used for business is used exclusively and regularly for business purposes. This means the space should not be used for any personal activities ([IRS Topic No. 509](https://www.irs.gov/taxtopics/tc509)).

 

2. Principal Place of Business

   -DO use the home office as your principal place of business. This can include administrative or management activities if there is no other fixed location where you conduct substantial administrative or management activities ([IRS Topic No. 509](https://www.irs.gov/taxtopics/tc509)).

 

3. Simplified Method

  -DO consider using the simplified method for calculating home office deductions. This method allows a deduction of $5 per square foot of the home used for business, up to a maximum of 300 square feet.

([FAQs - Simplified Method for Home Office Deduction]

 

https://www.irs.gov/businesses/small-businesses-self-employed/faqs-simplified-method-for-home-office-deduction

4. Record Keeping

   -DO maintain accurate records of your home office expenses, including mortgage interest, utilities, insurance, repairs, and depreciation. These records are essential for substantiating your deductions ([Publication 587](https://www.irs.gov/publications/p587)).

 

5. Form 8829

  -DO use Form 8829, Expenses for Business Use of Your Home, to calculate and report your home office deduction if you are using the regular method ([Publication 587](https://www.irs.gov/publications/p587)).

 

6. Daycare Providers

   -DO note that if you are a daycare provider, you may not need to meet the exclusive use requirement, but you must still use the space regularly for daycare activities ([IRS Topic No. 509](https://www.irs.gov/taxtopics/tc509)).

 

Feel free to CONTACT US at any time if you have questions!

DON'T:

1. Personal Use

   -DON'T use the home office space for personal activities. The IRS disallows deductions for any part of the home used both for personal and business purposes ([IRS Topic No. 509](https://www.irs.gov/taxtopics/tc509)).

 

2. Unreasonable Rent

     -DON'T deduct rent that is higher than market value or a professional appraisal, especially if the rent is paid to a related person. The IRS considers such rent unreasonable and disallows the deduction ([Small Business Rent Expenses](https://www.irs.gov/newsroom/small-business-rent-expenses-may-be-tax-deductible)).

 

3. Non-Qualifying Spaces

    -DON'T claim deductions for parts of your home that do not qualify as a home office, such as a room used for both business and personal purposes ([26 U.S. Code § 280A](https://www.law.cornell.edu/uscode/text/26/280A)).

4. Advance Rent Payments

  -DON'T deduct advance rent payments in the year they are paid. Only the amount that applies to the use of the rented property during the tax year can be deducted ([Small Business Rent Expenses](https://www.irs.gov/newsroom/small-business-rent-expenses-may-be-tax-deductible)).

 

5. Non-Business Expenses

   -DON'T include non-business-related expenses in your home office deduction. For example, expenses for lawn care or painting a room not used for business are not deductible ([Publication 587](https://www.irs.gov/publications/p587)).

 

By adhering to these dos and don'ts, small business owners can ensure they are in compliance with IRS regulations and maximize their home office deductions effectively. For more detailed guidance, refer to the [IRS Publication 587](https://www.irs.gov/publications/p587) and [IRS Topic No. 509](https://www.irs.gov/taxtopics/tc509).