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Home Office Deduction
Simplified vs Actual Expense Calculator

Enter your square footage and home expenses below — we'll calculate both IRS methods and tell you which one saves you more money.

📐 Square Footage
sq ft

Measure only the area used exclusively for business. Simplified Method caps at 300 sq ft.

sq ft

Required for the Actual Expense Method. Check your property records or lease.

💰 Annual Home Expenses (Actual Expense Method — enter what applies)
$/yr

Homeowners: use annual mortgage interest (from Form 1098), not principal. Renters: use total annual rent paid.

$/yr

Total annual cost for electricity, gas, and water. Add 12 monthly bills together.

$/yr

Your annual premium for homeowners or renters insurance.

$/yr

Whole-home repairs that benefit all areas (e.g. roof, HVAC). Office-only improvements may be 100% deductible separately — consult a tax professional.

$/yr

Optional. Depreciation is complex — consult a tax professional for your specific amount. Leave blank if unsure.

Note: All expense fields are optional. Leave blank if they don't apply or you don't know the amount. Only enter the total annual amount for the full home — the calculator applies the business-use percentage automatically.
✅ Recommended Method
Actual Expense Method
Saves you $1,600 more per year than the Simplified Method
Simplified Method
$1,000
Qualifying sq ft 200 sq ft
IRS rate $5.00 / sq ft
Cap status Within 300 sq ft cap ✓
Actual Expense Method
—
Business-use % 10.00% of home
Total home expenses $26,000
📁 Records to Keep
⚠️ This calculator provides educational estimates only and is not tax advice. IRS rules, expense eligibility, and deduction limits can change from year to year. Always verify current rates and eligibility with the IRS Publication 587 or a qualified tax professional before filing.

The Two IRS Methods Explained

📋 Simplified Method

Introduced by the IRS in 2013, the Simplified Method lets you deduct a flat $5 per square foot of your home office, up to a maximum of 300 square feet — a maximum deduction of $1,500 per year. No expense tracking required.

Deduction = sq ft × $5 (max 300 sq ft)

📊 Actual Expense Method

The Actual Expense Method calculates your business-use percentage (office sq ft ÷ total home sq ft) and applies it to your total eligible home expenses — potentially yielding a much larger deduction, but requiring thorough recordkeeping.

Deduction = (office ÷ home) × total expenses

FAQ

The home office deduction lets self-employed individuals and business owners deduct a portion of their home expenses if part of the home is used regularly and exclusively for business. The deduction covers rent or mortgage interest, utilities, insurance, repairs, and depreciation — prorated by the percentage of your home used for business.
To qualify, you generally must: (1) use a specific area of your home regularly and exclusively for business, and (2) use your home as your principal place of business or meet clients/customers there. The space must be dedicated — a kitchen table or shared bedroom corner generally doesn't qualify. Consult IRS Publication 587 or a tax professional for full eligibility rules.
Yes. You can choose whichever method gives you a larger deduction each tax year — you are not locked into the method used in prior years. However, if you used the Actual Expense Method and claimed depreciation in prior years, there may be depreciation recapture implications when you sell your home. Keep records of which method you used each year.
Generally, no — not under current law. The Tax Cuts and Jobs Act of 2017 suspended the employee home office deduction through at least 2025. W-2 employees who work from home cannot claim home office expenses as a miscellaneous itemized deduction on their federal return. This calculator is designed for self-employed individuals, sole proprietors, and business owners who file Schedule C. If you're unsure of your filing status, consult a tax professional.
The IRS requires that the space be used regularly and exclusively for business. A dedicated room is the clearest case. A partitioned section of a room may qualify if it is used only for business — but a shared dining table, couch, or bedroom does not. The space does not need to be a separate room, but it must have a clear, consistent, exclusive business purpose. See IRS Publication 587 for details.
The Simplified Method caps at $1,500/year regardless of your actual costs. If your total eligible home expenses (mortgage interest, utilities, insurance, repairs, depreciation) are high and your business-use percentage is meaningful, the Actual Expense Method can produce a significantly larger deduction. The tradeoff is thorough recordkeeping — you'll need receipts and bills for every expense claimed.
No. This is an independent educational calculator built to help you estimate and compare both methods. It is not affiliated with the IRS. Always verify your deduction using IRS Publication 587 or with a qualified tax professional before filing your return.