Yes, you can deduct home office expenses if you meet the IRS requirements. The space must be used regularly and exclusively for business. A spare bedroom that doubles as a guest room doesn’t qualify. A dedicated office that you use daily for running your company does.

The deduction applies to the business-use percentage of qualifying expenses. These include mortgage interest or rent, property taxes, utilities, homeowner’s insurance, repairs, and depreciation. If your home office is 200 square feet in a 2,000 square foot home, you can deduct 10% of these costs.

How you claim the deduction depends on your business structure. Sole proprietors and single-member LLCs report it on Schedule C using either the simplified method or actual expenses. The simplified method gives you $5 per square foot up to 300 square feet for a maximum $1,500 deduction. The actual expense method requires more documentation but often yields a larger deduction.

S-corp owners need a different approach. You cannot take the home office deduction on your personal return for S-corp work. Instead, the S-corp should reimburse you for home office expenses under an accountable plan. The corporation deducts the reimbursement as a business expense, and you receive the payment tax-free. This requires proper documentation and a written policy.

Partnership and multi-member LLC members face similar rules. The entity either pays rent to the member for the space or reimburses under an accountable plan. The details matter for getting the tax treatment right.

Documentation is essential regardless of your structure. Keep records of total home expenses, your square footage calculation, and evidence that the space is used exclusively for business. Photographs of the dedicated workspace help establish the exclusive use requirement.

The home office deduction also affects your home’s tax basis if you claim depreciation. When you sell the property, you may owe depreciation recapture taxes on the portion attributed to business use. This is worth discussing with your tax advisor before claiming the deduction.

For professional services firms and other businesses operating partially from home, this deduction can provide meaningful tax savings. But the rules around entity structure and reimbursement arrangements require careful handling. Getting it wrong means either leaving money on the table or creating audit exposure.

Working with controller services in Boca Raton that understand these distinctions ensures you claim what you’re entitled to while staying compliant with IRS requirements.