J.K. Lasser's Small Business Taxes 2017

CHAPTER 18 Home Office Deductions

1. Home Office Deductions in General
2. Special Requirements for Employees
3. Actual Expenses or Safe Harbor Amount
4. Actual Expense Method
5. Simplified Method
6. Special Business Uses of a Home
7. Mobile Offices
8. Ancillary Benefits of Claiming Home Office Deductions
9. Impact of Home Office Deductions on Home Sales

Today over 40 million Americans work at home at least some of the time, and the number is growing. Computers, smartphones, and the information highway make it easier and, in some cases, more profitable to operate a home office. The U.S. Small Business Administration reported that 52% of all small businesses are home-based and that they generate $102 billion in annual revenue; the average return on gross revenues for these businesses is 36%, compared with just 21% for non-home-based businesses.

As a general rule, the cost of owning or renting your home is a personal one and, except for certain specific expenses (such as mortgage interest, real estate taxes, and casualty losses), you cannot deduct personal expenses. However, if you use a portion of your home for business, you may be able to deduct a number of expenses, including rent or depreciation, mortgage and real estate taxes, maintenance, and utilities.

The SBA has said that the average home office deduction is $3,686. On the 25 million Schedule C filers in 2013 (the most recent year for statistics), home office deductions were claimed by more than 9.5 million filers and totaled nearly $9.6 billion ...